PKO BP makes it clear: the current account deficit will deepen

This and next year, the current deficit may deepen even further, but it will remain at a safe level from the point of view of macroeconomic balance – wrote PKO BP economists in a commentary on Tuesday's NBP data.

On Tuesday, the National Bank of Poland announced that in August 2025 the current account balance was negative and amounted to PLN 13.2 billion. Converted into euros, the deficit amounted to almost EUR 3.09 billion.

“In August, both exports and imports of goods were lower than a year ago, which can be attributed to the negative impact of the calendar. Exports (in EUR) unexpectedly decreased by 1.4% y/y, which was caused by a decline in sales of parts for means of transport (batteries) and durable consumer goods. However, the increase in exports of agricultural products and other consumer goods continued, mainly due to re-export of clothing and capital goods (computer equipment). Imports decreased by 1.2%. y/y, most strongly in the case of fuels, which resulted from the price effect. A slight increase in imports was recorded in the case of means of transport, and the highest increase was in the value of imports of other consumer goods (clothing, footwear, video game consoles, i.e. goods whose exports from Poland have recently increased),” they wrote. PKO BP economists in a commentary on NBP data.

The bank's experts added that the trade deficit has been stabilizing for several months (calculated in terms of the so-called liquid year, i.e. twelve months back) at a level below 1.5%. GDP. They also added that in services, imports continued to grow faster than exports (an increase of 7.8% year-on-year and 2.5%), and the surplus after August was reduced to 4.3%. GDP.

“The main surprise in relation to our forecast was the primary income account – it recorded a record high monthly deficit of EUR 3.887 billion. Expenditures in this account (mainly income of direct and portfolio investors), at the level of EUR 5.261 billion, had the second highest value in history, at the same time revenues (of Polish investors abroad) have been in a downward trend for several months. In terms of a liquid year the deficit in the primary income account deepened to 3.6%. GDP,” PKO BP economists said.

They added that this supports expectations that as corporate performance improves, primary income will widen the current account deficit. They emphasized that in August 70 percent profits from direct investments in Poland were reinvested, but at the same time they added that in this area there is stagnation in terms of “the inflow of equity instruments and a decline in the inflow of debt instruments.”

“After August, the total balance of the current and capital account was -0.5% of GDP (the 5th consecutive month with a deficit). The capital account includes funds from the EU intended for investment, and for several years it has been increasingly negatively impacted by transactions related to the purchase and sale of CO2 emission rights. We expect that this and next year the current deficit may deepen even further, however, it will remain at a level that is safe from the point of view of macroeconomic balance and will cover the capital account and the inflow of FDI. The effect of a slight recovery in exports, due to better economic conditions abroad, will be offset by growing investment imports,” wrote PKO BP economists in a commentary. (PAP)

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