Poland’s currency fell to the lowest level in more than a week against the euro after a deeper-than-expected slowdown in manufacturing spurred speculation of further interest-rate cuts.
The purchasing managers’ index dropped to 48 from 48.9 in February, HSBC Holdings Plc said in a statement on the Markit Economics website today. That’s the lowest reading since October and below the 48.7 median estimate of 23 economists surveyed by Bloomberg. A result above 50 indicates expansion, while a figure below that shows contraction.
The PMI figure “raises speculation the expected economic recovery will be delayed” and that it might be “rather frail,” Bank Pekao SA economists led by Marcin Mrowiec wrote in a report after the data was published. “This will intensify speculation on the central bank continuing interest rate cuts.”
The zloty depreciated 0.3 percent to 4.1886 per euro, the weakest on a closing basis since March 21, as of 5:23 p.m. in Warsaw.
The March PMI reading was consistent with the central bank’s forecast, which assumes Poland’s economic growth will reach 1.3 percent this year, Andrzej Slawinski, the head of the central bank’s research institute in Warsaw, said on TVN CNBC today.
The yield on Poland’s 10-year government bonds fell seven basis points, or 0.07 percentage point, to 3.87 percent, dropping for the first time in three days.
The government is “receiving signals from the market” that Poland’s reputation wouldn’t suffer “even if the budget deficit widened to almost 4 percent” of gross domestic product this year, Ludwik Kotecki, the Finance Ministry’s chief economist, told Gazeta Wyborcza in an interview today.
Poland’s public debt fell to 52.7 percent of GDP in 2012 from 53.5 percent in 2011, according to the Finance Ministry’s figures published on its website today. According to European Union accounting methods, Poland’s public debt fell to 55.6 percent last year from 56.4 percent in 2011, the data shows.