VIENNA (MNI) – Poland’s Central Bank governor Marek Belka said
Friday he is concerned about the volume of liquidity in the market
searching for high yields.
Capital inflows into his country are growing on a daily basis, the
former IMF official told a conference audience.
He also joined a chorus of voices warning that Germany’s rapid
growth in 2Q, a torrid clip of 2.2% q/q, is not sustainable.
“Portfolio capitals are flowing in quite intensely which is also a
short-term type of capital that can change the sentiment overnight,”
Belka said. “It helps finance the borrowing needs of the governments but
it does not add too much to the longer term perspective of the economy.”
“What worries me is that there is so much liquidity in the market
in the world and this liquidity is looking for yield. And those yields
are among others in Poland,” he added.
“Of course we are not that much hit by this as for example Brazil
or other emerging superpowers, but still for an economy like Poland, too
much of a good thing, which is the inflow of capital, can be also
frustrating,” Belka conceded.
“I am concerned…if too much capital is coming for example to be
invested in Polish treasury bond[s] then one day it might reverse,” he
elaborated.
Second quarter German growth is probably not sustainable, he
underlined, but European Central Bank forecasts are still much more
positive than had been expected last year. The economy is reviving but
at a rather moderate rate and it is going to continue, Belka predicted.
[TOPICS: M$$EC$,M$X$$$,MT$$$$,MGX$$$]
