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Poland Business Forecast Report Q3 2014

  • May 2014
  • -
  • Business Monitor International
  • -
  • 44 pages

Core Views

The export-driven recovery we have anticipated in Poland is now in motion, and we are now turning increasingly positive towards the country’s domestic demand outlook. We expect a robust recovery in domestic demand in 2014, as low inflation, solid wage growth and an improving labour market bolster household purchasing power. Poland’s external position remains relatively strong and we estimate the current account deficit arrived at just 1.6% of GDP in 2013. However, a large stock of foreign-owned government paper and ongoing private sector deleveraging represent the two major risks to our sanguine outlook. We continue to expect the Civic Platform (PO)-led government to serve out its term. The government won a recent parliamentary vote of confidence, suggesting its parliamentary majority is safe
for the time being. We also believe that the opposition will struggle to broaden its appeal despite the rising government unpopularity, limiting its ability to challenge the ruling coalition.

Major Forecast Changes

Due to weaker than expected inflation and the growing potential for the ECB to embark on a quantitative easing programme, we now expect the first policy rate hikes to arrive in Q115, from our previous forecast of Q414.

Table Of Contents

Poland Business Forecast Report Q3 2014
Executive Summary . 5
Core Views 5
Major Forecast Changes ..5
Key Risks To Outlook 5
Chapter 1: Political Outlook 7
SWOT Analysis .. 7
BMI Political Risk Ratings .. 7
Domestic Politics . 8
Ukraine Crisis Bolsters Civic Platform Support 8
In line with our expectations, support for the ruling Civic Platform party has begun to rise again as the economy rebounds. The
government's prominent role in the handling of the Ukrainian crisis has also provided the party with a boost ahead of the European
Parliamentary elections.
TABLE: Political Overview .8
Long-Term Political Outlook . 9
Long-Term Political Outlook - A Maturing Regional Power ..9
We consider Poland's long-term political risk profile to be on an upward trajectory, reflecting the country's maturing political institutions
and greater confidence in the conduct of external affairs. Solid macroeconomic fundamentals underpin our expectation for improvement
over the long run. Nevertheless, Poland still faces significant challenges to political stability in its external relations and at home.
Chapter 2: Economic Outlook . 13
SWOT Analysis 13
BMI Economic Risk Ratings 13
Economic Activity . 14
Remaining Below Consensus On Growth ..14
We maintain our slightly below consensus forecast for real GDP to grow by 2.8% in 2014 and 3.1% in 2015, as declining Asia demand
is expected to feed through into weaker German factory output, in turn dampening demand from Polish supply chains. 14
table: Economic Activity .14
Monetary Policy .. 16
Shifting First Rate Hike To 2015 ..16
An absence of inflationary pressures, a slight deceleration in economic activity and the threat of the ECB embarking on a quantitative
easing programme have decreased the probability of a rate hike in 2014, and we now expect the NBP to keep rates on hold until
Q115.
table: Monetary Policy 16
Balance Of Payments . 17
Trade Largely Unaffected By Ukraine Crisis 17
We forecast a gradual widening of Poland's current account deficit as economic activity accelerates across 2014 and 2015, and do not
expect the Ukrainian crisis to substantially affect trade flows.
table: Current Account ..18
Exchange Rate Policy . 19
PLN: Tight Trading Range Across 2014 ..19
TABLE: BMI Poland Currency Forecasts ..19
Chapter 3: 10-Year Forecast . 21
Long-Term Future Looks Bright ..21
We forecast Polish real GDP growth to average 3.4% between 2014 and 2024, down slightly from 4.0% between 2001 and 2011.
Poland is well placed to avoid the pitfalls of the middle income trap and continue benefitting from large catch-up growth with the rich EU
economies.
TABLE: Long-Term Macroeconomic Forecasts .21
Chapter 4: Business Environment 25
SWOT Analysis 25
BMI Business Environment Risk Ratings .. 25
Business Environment Outlook 26
Institutions . 26
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS 26
TABLE: BMI LEGAL FRAMEWORK RATING .27
Infrastructure 28
TABLE: LABOUR FORCE QUALITY ..28
TABLE: EMERGING EUROPE - ANNUAL FDI INFLOWS ..29
TABLE: TRADE AND INVESTMENT RATINGS 30
Market Orientation . 31
tABLE: Top Export Destinations .31
Operational Risk 32
Chapter 5: Key Sectors 33
Defence 33
TABLE: Defence Expenditure 33
Freight Transport 36
table: Road Freight ..37
TABLE: Rail Freight .38
TABLE: Inland Waterway Freight .38
TABLE: Air Freight 39
TABLE: Maritime Freight .39
Other Key Sectors . 41
table: Pharma Sector Key Indicators ..41
table: Oil and Gas Sector Key Indicators .41
table: Autos Sector Key Indicators ..41
table: Telecoms Sector Key Indicators .42
table: Infrastructure Sector Key Indicators 42
table: Food and Drink Sector Key Indicators ..42
Chapter 6: BMI Global Assumptions .. 43
Global Outlook . 43
Growth Increasingly Polarised ..43
Table: Global Assumptions ..43
Table: Developed States, Real GDP GrowtH, % 44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, % .. 44
Table: Emerging Markets, Real GDP Growth, % ..45

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