August data from the National Bank of Poland (NBP) showed a clear deterioration in the country’s current account, which recorded a deficit of PLN –13.2 billion (EUR –3.09 billion). The main contributors were a trade deficit (–PLN 9.2 billion), a deeper primary income deficit (–PLN 16.6 billion), and a small secondary income deficit (–PLN 0.9 billion). On the positive side, services once again acted as a stabilizer, generating a surplus of PLN +13.5 billion. The financial account reflected strong portfolio inflows into government debt and substantial reinvested earnings in foreign direct investment (FDI). On a 12-month basis, the current account deficit stands at EUR –8.53 billion (–0.96% of GDP) — a moderate and macroeconomically safe level.
Key Takeaways (Based on NBP Data)
- Current account: PLN –13.2 billion (vs –PLN 8.7 billion a year earlier).
- Goods: Exports PLN 106.6 billion (–2.1% y/y), imports PLN 115.7 billion (–1.8% y/y); balance PLN –9.2 billion.
- Services: Revenues PLN 40.3 billion (+1.9% y/y), expenditures PLN 26.8 billion (+7.1% y/y); balance +PLN 13.5 billion — strongest in “other services” and transport.
- Primary income: PLN –16.6 billion; including direct investors’ income PLN 12.6 billion (dividends PLN 2.9 billion, reinvested earnings PLN 8.7 billion, interest PLN 1.0 billion); portfolio payments PLN 5.5 billion.
- Secondary income: PLN –0.9 billion (government –1.3 billion, other sectors +0.4 billion).
- Capital account: PLN –0.6 billion; revenues PLN 5.9 billion (including PLN 1.7 billion from CO₂ allowance sales), expenditures PLN 6.5 billion (CO₂ purchases).
- Financial account: PLN –10.8 billion (EUR –2.54 billion); nonresidents increased investments in Poland by PLN +5.7 billion (FDI liabilities +3.8 billion, portfolio liabilities +2.3 billion, other liabilities –0.4 billion).
- NBP reserves: Increased by PLN +3.7 billion; total at PLN 954.0 billion (+PLN 0.4 billion m/m).
- 12-month C/A: EUR –8.53 billion (–0.96% of GDP).
What Drove the Weak August Results?
Seasonality and Calendar Effects
Fewer working days compared with last year and typical summer slowdowns reduced trade activity. In addition, a persistently weak global environment limited demand for selected Polish exports.
Export Structure
The decline was mainly due to a sharp drop in exports of transport equipment (especially traction batteries) and durable consumer goods. Intermediate goods also weakened slightly. In contrast, exports of agricultural products, “other” consumer goods (including re-exports of clothing), and investment goods such as computer equipment increased.
Imports
Imports fell primarily in fuels, reflecting lower global oil prices. Most other categories showed only minor declines. Imports of transport equipment (passenger cars) and consumer goods such as clothing, footwear, and gaming consoles grew.
Services Remain the Pillar of External Stability
The PLN +13.5 billion services surplus stemmed from positive balances across all major categories, with the strongest contributions from “other services” (+PLN 6.6 billion) and transport (+PLN 3.8 billion). For years, services have cushioned fluctuations in goods trade and were crucial in mitigating August’s current account deterioration.
Income Balance: Typical Summer Dip Driven by Dividend Payouts
The –PLN 16.6 billion primary income deficit reflects high payouts of dividends and interest to foreign investors, as well as strong reinvested profits (PLN 8.7 billion). While this weighs on the current account, it also signals the high quality of foreign capital, as companies continue to reinvest their Polish profits rather than repatriate them.
EU Transfers, CO₂ Trading, and the Capital Account
Transfers from the European Commission amounted to PLN 3.8 billion (of which PLN 1.2 billion in the current account, the remainder in the capital account). Poland’s contribution to the EU budget totaled PLN 2.9 billion, resulting in a net positive balance of +PLN 0.9 billion from EU transactions.
The capital account reflected active trading in CO₂ emission allowances: revenues from sales totaled PLN 1.7 billion, but purchases of allowances drove the overall capital account to –PLN 0.6 billion.
Financial Account: Healthy Quality of Capital Inflows
- FDI liabilities +PLN 3.8 billion: driven by new equity inflows and, above all, reinvested earnings, despite an outflow in intercompany debt (–PLN 5.4 billion).
- Portfolio liabilities +PLN 2.3 billion: foreign investors increased their holdings of Polish debt, mainly government bonds on the domestic market (+PLN 2.4 billion), while slightly reducing equity positions (–PLN 0.4 billion).
- Other liabilities –PLN 0.4 billion: lower obligations in the banking sector (–PLN 2.3 billion) and government/local authorities (–PLN 1.5 billion), partly offset by higher liabilities of the NBP (+PLN 0.7 billion) and other sectors (+PLN 2.6 billion).
On the asset side, Polish residents’ investments abroad declined by PLN 5.1 billion — including a –PLN 4.8 billion drop in FDI assets (mainly debt) and a –PLN 5.2 billion fall in foreign deposits and accounts held by Polish banks. Overall, this contributed to higher domestic liquidity.
Reserves and the 12-Month Perspective
NBP’s official reserves increased by PLN 3.7 billion, reaching PLN 954.0 billion at the end of August — a slight month-to-month rise.
On a 12-month cumulative basis, the current account deficit totals EUR –8.53 billion (–0.96% of GDP), a moderate level that poses no threat to Poland’s external stability, particularly given the ~EUR 40 billion total capital inflow (FDI + portfolio).
Risks and Outlook for Q4
Short-term risks: external demand (especially from the eurozone), energy and freight costs, and global interest rates, which affect portfolio inflows.
Stabilizing factors: a durable services surplus, sustained demand for Polish government bonds among foreign investors, reinvested FDI profits, and the gradual restoration of EU funds — particularly for investment projects.
Outlook: as seasonal factors fade and exports of investment goods (ICT) and agricultural products rebound, the current account should improve in the final months of the year — provided there is no significant deterioration in EU economic conditions.
Conclusion
August was a weak month for Poland’s current account — a result of seasonal patterns and large income outflows — but the country’s external fundamentals remain strong. The services sector continues to offset trade volatility, capital inflows remain of high quality, and foreign reserves are robust. From an annual perspective, Poland’s external position is stable and resilient.
Source: CEO.com.pl – A Weaker Month for the Current Account, but Poland’s External Fundamentals Remain Solid
