Poland: Europe s economic outperformer Piotr Bujak Chief Economist at Nordea Bank Polska PKO Bank Polski Group Copenhagen, 29 April 2014
Poland crisis-proof economic front-runner 300 250 200 % Cumulated real GDP growth (1995=100) Poland Hungary Czech Republic Slovakia Romania Denmark IMF WEO Forecast 150 100 50 1995 1998 2001 2004 2007 2010 2013 2016 2019 Source: IMF World Economic Outlook 2014. 2
EU funds fuel economic growth: focus shift to private investment EU funds inflows to Poland Distribution of funds between public and private sectors Source: Mininstry of Infrastructure and Development, PKO Bank Polski. 3
Free floating and undervalued exchange rate Market EURPLN rate against exports break-even EURPLN rate Source: NBP, PKO Bank Polski. 4
Favourable structure of foreign trade Poland's exports by countries in 2013 (% of total) Others; 35 Germany; 25 UK; 6,5 Slovakia; 2,6 Sweden; 2,7 Ukraine; 2,8 Netherlands; 4 Italy; 4,3 France; 5,6 Russia; 5,3 Czech Republic; 6,2 Source: Polish stats office, Nordea Markets Source: GUS, PKO Bank Polski. 5
Fiscal policy absorbed adverse external shock Fiscal balance Fiscal policy to boost growth in 2014 as fiscal drag is receding 0-1 -2-3 -4-5 Poland Euro area 2,0 1,5 1,0 0,5 Change in real GDP growth (%pt), 2014f* EZ PL US -6 0,0 R² = 0,38-7 -8-9 %GDP 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: IMF World Economic Outlook 2014. -0,5 Change in fiscal thrust^ (% of GDP), 2014f* -1,0-3,0-2,5-2,0-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 Source: IMF Fiscal Monitor (October 2013) and IMF WEO (*forecasts). ^Fiscal thrust defined as change in the cyclically-adjusted primary balance (CAPB). Note: the chart presents change in the fiscal thrust (ie, change of change in CAPB). CH 6
More room for fiscal stimulation Public debt (2013) More room for fiscal stimulation created thanks to changes in the pension system 70 65 60 55 50 45 40 %GDP Public debt (domestic methodology) Public debt threshold Public debt excl. debt in pension funds portfolio (domestic methodology) 35 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source:Eurostat Source: GUS, Ministry of Finance, PKO Bank Polski 7
No overhang of excessive private sector debt 200 180 160 140 120 100 80 60 40 % of GDP % of GDP Private sector debt 200 180 160 140 120 100 80 60 40 20 Poland EU average Germany 20 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Eurostat 8
No overhang of excessive private sector debt Private sector debt (2013) Source:Eurostat 9
Improving quality of institutions World Bank s Doing Business Ranking Corruption Perception Index 0 10 10 20 30 40 50 9 8 7 6 Romania Hungary Czech Republic Poland Slovakia Denmark 60 5 70 4 80 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 Denmark Poland Slovakia Romania Hungary Czech Republic 2 1998 2000 2002 2004 2006 2008 2010 2012 Source: World Bank Source: Transparency International 10
Poland s international labour cost competitiveness improves Poland s real unit labor cost against Nordic countries* *Unit labour costs, Real, ratio of compensation per employee to nominal GDP per person employed, Index, 2005=100 Source: ECFIN, Reuters 11
Cyclical recovery improving external environment 8 6 % y/ y GDP growth forecasts 4 2 0-2 -4 Germany Poland World -6 1998 2000 2002 2004 2006 2008 2010 2012 2014 Source: IMF World Economic Outlook 12
Cyclical recovery fiscal stimulation 4 3 Poland s GDP growth vs changes in fiscal policy position %GDP/ pp, y/ y global crisis 2008-2009 2 1 0-1 -2-3 -4 Change in GDP growth rate (pp, y/ y) Change in EU funds inflow and primary structural deficit (%GDP, y/ y) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Eurostat, Ministry of Regional Development, PKO Bank Polski 13
Cyclical recovery accommodative monetary policy 8 % Key policy rate in Poland forecast 6 4 2 0 2004 2006 2008 2010 2012 2014 Source: GUS, NBP, PKO Bank Polski NBP reference rate Taylor Rule (* ) 14
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