Polish market is still on a roll

If you’ve been holding Polish stocks this year, “you can afford to buy a round of Zywiec beers”, says Victor Reklaitis in Barron’s. Poland elected a nationalist government with authoritarian tendencies in late 2015, and there have been several rows with the EU since then. Brussels has even threatened to strip Warsaw of EU voting rights if the Law and Justice Party forces judges out of office. Yet this difficult backdrop has so far done nothing to hamper the economy.

GDP expanded by 3.9% year-on-year in the second quarter, after a 4% rise in the first. Consumption grew at the fastest pace in eight years in the first quarter, with record-low unemployment and new child-benefit payments boosting confidence.

The stronger eurozone bodes well, while on the fiscal front Poland has “had a spectacular year”, notes Bank of America Merrill Lynch. Closing VAT loopholes has paid dividends, helping lower the deficit. This is likely to hit 2.5% of GDP this year. Inflation is stable, suggesting no need for interest rates to rise just yet. Stocks remain good value and look set to head back to their 2015 highs.