The zloty resumed a depreciating trend on July 4, following the announcement of radical pension reform by Development Minister Mateusz Morawiecki. A combination of investor unease over the new proposals and jittery equity markets following the UK's referendum vote to leave the EU ('Brexit'), which has pushed up yields on long-term government bonds, will weigh on Polish business sentiment and fixed investment in the second half of 2016.
Poland's capital market is likely to receive a setback in the short term, with fewer listings on WIG20, as some pension funds leave Poland.
Locally owned investment vehicles will gradually come to play a greater role.
Labour market growth and rising domestic demand will help offset investor jitters or sluggish private investment activity later in 2016.
While pension reform will provide a short-term boost to public finances, public debt will rise after 2017, absent any fiscal consolidation.
