Poland exchange traded funds are gaining strength and testing their short-term trend lines as the Polish government expands stimulative measures to combat its weakest economic growth rate in 16 years.
The iShares MSCI Poland Capped ETF (NYSEArca: EPOL) was up 1.1% in late trading Tuesday and crossed above its 50-day moving average. Meanwhile, the Market Vectors Poland Fund (NYSEARca: PLND) rose 0.5% and is also moving toward its short-term trend line. So far this year, EPOL is down 12.2% and PLND declined 9.4%.
The Polish government plans to expand the budget deficit by $4.95 billion and suspend limits to fiscal stimulus, Bloomberg reports.
“We need to boost the economy at the critical moment, which is this year, while the first signs of recovery should be visible in late 2013 and 2014,” Prime Minister Donald Tusk said in the article.
The move will help stem the weakening consumer confidence and a Eurozone crisis that proved “more contracted than expected,” according to Finance Minister Jacek Rostowski.
“Under the current conditions of stagnation, Poland’s economy needs stimulus in the short term and fiscal consolidation in the long term,” Rostowski said in the article. “Widening the government budget deficit by about 1 percent of gross domestic product is a strong boost by any normal economic canon.”