EZA 727: Briefing note:

24 February 2006

Poland – Outlook
Favourable economy amidst political storms The economy offers an almost ideal environment for the capital markets with a reacceleration of GDP growth to 4.5% this year and (currently) sub 1% inflation. Almost the opposite is true for politics, as the conservative PiS, winner of the last elections, performed a left-shift on taxes and leans towards more social spending to accommodate populist fringe parties to stabilise its minority government. The conflict with the central bank and political woes weigh on the stock market, while bonds and currency are performing well in the current low inflation environment.

SummaryAsset conclusions: favour bonds over equities, given low inflation and a stable currency.

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© Graham Bishop