Download map of what remains to be done

Performance of the Polish economy
in the days of global economic
turbulence
„Mapping the previous 20 years and
the next 20 years”
Jan Krzysztof Bielecki,
Chairman of the Economic Council to
the Polish PM Donald Tusk
Tel Aviv, December, 2010
1
Map of the presentation
„All about maps”:
- Map of European growth in crisis year of 2009
- Panoramic map (20 years) of how we got
there
- Map of the CEE – why you should think
countries, not „the region”
- Map of what remains to be done
- How The Economist sees the changes on the
map of Europe in the next 5 years
2
Polish economy is growing even during the time
of crisis – in very tough 2009…
FIN
- 7,8
Real GDP growth rate
NOR
- 1,5
in Europe 2009
SWE
- 4,9
(y-o-y change)
EST - 14,1
LVA - 18,0
DNK
- 4,9
LTU - 15,0
EU: - 4,2
Euro area: - 4,1
IRL
- 7,1
GBR
- 4,9
NLD - 4,0
DEU
BEL
- 5,0
- 3,1
POL
1,7
CZE - 4,2
LUX - 3,4
FRA
- 2,2
SVK -4,7
AUT - 3,6
CHE
- 1,5
SVN
- 7,8
HUN - 6,3
ITA
- 5,0
PRT
-2,7
Source: European Commission
ESP
- 3,6
ROU
- 7,1
BGR - 5,0
GRC
- 2,0
CYP - 1,7
5
PANORAMIC MAP OF HOW WE GOT THERE
4
Poland was the first transition country to
exceed its 1989 GDP level
200
Real GDP (1989=100)
180
Bulgaria
Estonia
160
Hungary
140
120
Latvia
100
Lithuania
80
60
Poland
40
Romania
20
Russia
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
0
Slovak
Rep
Source: EBRD, Pekao Research
5
Following two years of painful reforms, back
on the growth track
Source: EBRD Transition Report 2008
6
Key transition indicators suggest Poland
scores very close to „best pupils in its class”
*
* Latvia,Estonia and Croatia were
considered more advanced in banking
reform...
Source: EBRD Transition Report 2008
7
Dynamic increase of foreign trade is one of
the key drivers of investments and growth
160
Foreign trade turnover (current prices, bn USD)
140
120
Exports
Imports
1995
2000
100
80
60
40
20
0
1990
2005
2009
Source: Statistical Office, Pekao Research
8
MAP OF THE CEE –
WHY YOU SHOULD THINK BY COUNTRIES
AND NOT BY „THE REGION”
9
The crisis was an „acid test” for the growth
model of CEE countries…
10
These countries that expanded their budgets
too much (often with credit booms) - suffered
11
Poland is less dependent from external
conditions than other countries in the region
Source: World Bank
12
Polish banking sector lent mostly in local
currency – smaller FX risk
Source: World Bank
13
Polish banking sector has almost balanced
loan-to-deposit ratio – less risky than others
Source: World Bank
14
MAP OF WHAT REMAINS TO BE DONE
15
Key challenges for the government - deficits
General government fiscal balance, % of GDP
Source: World Bank
16
Key challenges for the government - debt
General government public debt, % of GDP
Source: World Bank
17
However, indebtedness remains one of the
lower ones compared to other EU countries…
Debt to GDP ratio
14
Ireland
Latvia
12
Increase between 2010 and 2009 (in pp)
Spain
UK
10
Greece
Portugal
Lithuania
8
UE France
Romania Finnland
Cyprus
Slovenia Slovakia
EURO AREA
NL
Germany
(without OPF)
Luxembourg Dennmark
Austria
Czech Republic
6
4
Estonia
Bulgaria
2
Poland (without
Malta
Belgium
Italy
OPF)
0
0
20
40
Hungary
Sweden
2010
level (%)
60
80
100
120
140
Source: World Bank
18
Lower outstanding public debt……
130
126.8
122.9
120
Public debt as % of GDP
116.0118.4
2009
110
2010
98.6
100
90
83.3
76.1
80
78.4 79.8
73.4 75.4
65.5
70
62.8
60
53.2
51.0
55.4
50
38.0 40
40
35.3
39.1
30
20
10
0
Greece
Italy
Ireland
Portugal
Hungary
Germany
Spain
Poland
Poland ex
OFE
Czech
Source: for 2009 official data from Eurostat, and for 2010 estimates from official fiscal notifications of the countries
19
……is reflected in lower credit risk
pts
CDS rates
Oct 08
Nov 08
Dec 08
Jan 09
Feb 09
Mar 09
Apr 09
May 09
Jun 09
Jul 09
Aug 09
Sep 09
Oct 09
Nov 09
Dec 09
Jan 10
Feb 10
Mar 10
Apr 10
May 10
Jun 10
Jul 10
Jul 10
Aug 10
Sep 10
Oct 10
Nov 10
1100
1000
900
800
700
600
500
400
300
200
100
0
Poland
Spain
Czech Rep.
Portugal
Hungary
Ireland
Greece
Italy
Note: CDS rates reflect cost of protection against default of debt issuer
20
…..and cost of debt servicing
YIELD AND SPREAD TO BUNDS (5Y) AT THE END OF A MONTH
Novem ber 10
October 10
Septem ber 10
yield %
spread bp
yield %
spread bp
yield %
spread bp
Greece
12.59
1087
11.46
976
10.30
881
Portugal
6.00
428
4.78
308
5.25
376
Hungary
5.75
403
4.75
305
5.25
376
Spain
5.53
381
5.33
363
5.08
359
Ireland
4.55
283
3.39
169
3.36
187
Italy
3.66
194
2.86
116
2.84
135
Poland
3.42
170
2.48
78
2.44
95
YIELD AND SPREAD TO BUNDS (10Y) AT THE END OF A MONTH
Novem ber 10
October 10
Septem ber 10
yield %
spread bp
yield %
spread bp
yield %
spread bp
Greece
12.01
933
10.67
815
10.56
826
Ireland
9.42
683
7.10
445
6.64
452
Portugal
7.16
449
6.00
348
6.38
408
Hungary
6.22
354
5.75
323
5.70
339
Spain
5.58
290
4.21
169
4.14
183
Poland
4.81
213
3.93
141
3.97
166
Italy
4.69
202
3.90
138
3.87
156
Note: for every country yields (in %) and spreads to Bunds (in bps) for bonds denominated in euro
21
Key challenges for the government - summary
Ambitious privatization plans –almost 740
enterprises in the next two-three years
Extensive infrastructure building plans
(motorways, energy sector), to be boosted with
EU funds. Almost 1100km of motorways under
construction
Challenge of maintaining fiscal discipline amid
economic slowdown, ambitious infrastructure
construction plans and the challenge of
structural changes in economy and society
22
Key challenges according to the European
Commission latest report
- curbing structural deficit
- continuing catching-up process
- securing steady competitiveness gains via
continuous upgrade of the export structure
- maintaining macroeconomic stability
Source: European Commision, „Poland – leading the pack in the recovery phase”, May 2010
23
MAP OF EUROPE IN 2015 ?
24
Europe in 2015… by „The Economist”
25
Source: „The Economist”, May 2010
Thank you for your attention …
26
Enclousers
27
Relatively strong performance of Polish stock
market
Stock indices (end 2009=100)
130
Emerging markets
World
Poland
Czech
Hungary
120
110
100
90
80
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
Jan-10
Dec-09
70
28
Poland attracts foreign capital
Share of foreign investors in holders
of Polish treasury securities
4000
3000
Jul 10
Jan 10
Jul 09
Jan 09
Jul 08
Jan 08
Jul 07
Jan 07
-2000
-3000
Jul 06
0
-1000
Jan 06
2000
1000
150
20
100
10
50
04
04
05
05
06
06
07
07
08
08
09
09
10
5000
30
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Net purchases of Polish stocks by
foreign investors (PLNm)
% (lhs)
PLNbn (rhs)
29