May deficit of $708 million highlights negative impact of strong zloty

The current account deficit leapt to $708 million (5.2-5.3 % of GDP) in May, topping analysts' expectations of $500-600 million and raising fears over slackening Polish exports. Some economists expect the deficit to increase even further. The news published on Friday shocked the market and sent the unusually strong zloty to its month's low, at over zl. 4 against the dollar. According to the Polish central bank, the foreign trade deficit, which makes up the bulk of the current account, increased to $1,117 million in May. Analysts attribute the higher-than-expected May deficit to the strong zloty which has harmed exports, now conspicuously, as well as the growth in imports ($3,660 million in May vs. $3,272 million in April). "It is clear that the engine of growth is losing strength; even if June's figures do not reflect this, we can expect worse results in the second half of this year," said Miroslaw Gronicki, an economist from BIG BG bank. (Rzeczpospolita, June 30-July 1, p. B1) J.K.