Poland s Economic Prospects Unicredit Conference Warsaw, June 8, 11 Mark Allen Senior IMF Resident Representative for Central and Eastern Europe
Recovery is driven by domestic demand Contributions to Real GDP Growth (percent change from a year earlier) 1 8 6 - - Net Exports Gross Fixed Capital Formation Public Consumption Inventories Private Consumption GDP -6 8Q1 8Q3 9Q1 9Q3 1Q1 1Q3 11Q1 11 1 Source: Polish Statistical Office; IMF staff estimates.
Industrial output slowing: retail sales rising 3 Industrial Production in Manufacturing and Real Retail Sales (percent change from a year earlier) 3 5 15 1 5-5 -1-15 - Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Source: Polish Statistical Office. Real retail sales Industrial production, manufacturing
Net export growth is below pre-crisis level Nominal Trade (percent change from a year earlier) 6 5 3 1-1 - -3 - -5 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Source: Polish Statistical Office. Exports Imports
Unemployment remains high... Unemployment Rate by Education level (percent of Labor Force) 5 Total Tertiary Secondary Primary and lower 15 1 5 5 7Q1 8Q1 9Q1 1Q1 Source: Polish Statistical Office.
...and employment is only growing slowly 6 Employment Growth by Sector (percent change from a year earlier) 1 1 8 6 - - -6-8 7q1 8q1 9q1 1Q1 Source: Polish Statistical Office. Total Agriculture Industry Services
Core inflation is rising towards the target CPI Inflation (percent change from a year earlier) 6 Headline Core Target 5 3 1 7 Jan-7 Jun-7 Nov-7 Apr-8 Sep-8 Feb-9 Jul-9 Dec-9 May-1 Oct-1 Mar-11 Source: Polish Statistical Office; National Bank of Poland.
Little sign yet of second round effects Wages and Unit Labor Cost (percent change from a year earlier) 16 1 1 Wages, nonfarm private (3-month moving average) Nominal unit labour cost (SA) 1 8 6 8 - Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Source: Polish Statistical Office; Eurostat.
Capacity utilization has tightened Output Gap Estimates and Capacity Utilization (percent of potential output, percent ) 9 5 3 1-1 - -3 - -5 7Q1 8Q1 9Q1 1Q1 Source: European Commission; Polish Statistical Office; IMF staff estiamtes. Capacity utilization (rhs) Output Gap (Multivariate filter) Output Gap (Production function) Output Gap (GPM) 1 9 8 7 6 5
MPC has begun to tighten policy rates Policy Rate (percent) 1 1 8 Poland Hungary Czech Republic ECB 6 1 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Source:Bloomberg.
Corporate credit is recovering Household and Corporate Sector Credit (percent change from a year earlier) 8 7 6 Consumer credit Mortgage credit Corporate Credit 5 3 1 11-1 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Source:National Bank of Poland.
and the banking sector appears sound. Banking Sector Net Profit and Capital Adequacy Ratio (billion of zloty, percent) 8 7 6 5 3 1 CAR (rhs) Net Profit 16 1 1 1 1 7Q1 8Q1 9Q1 1Q1 Source:National Bank of Poland. 8
Share of new FX credit has fallen 13 Currency Structure of New House Purchase Loans (percent of total) 1% 9% 8% 7% 6% 5% % 3% % 1% % Sep-7 Mar-8 Sep-8 Mar-9 Sep-9 Mar-1 Sep-1 Mar-11 Swiss franc Euro US dollar Zloty Source:National Bank of Poland.
but the legacy of the crisis remains. Non-Performing Loans by Sector (percent of total loans) 1 1 1 8 6 1 Total Corporates Households 7Q1 7Q3 8Q1 8Q3 9Q1 9Q3 1Q1 1Q3 Source:National Bank of Poland.
Fiscal adjustment is under way General Government Balance (percent of GDP) - - -6-8 -1 Expenditure change (up = reduction) Revenue change (up =increase) Fiscal stance change Budget Deficit 5 6 7 8 9 1 11 15 Source: IMF, World Economic Outlook.
...and budget performance is better than planned,... State Budget Performance (millions of zloty) 1-1 8-11 9-3 11 (planned) 16 - -5 Source: Ministry of Finance. 1 Jan Mar May Jul Sep Nov
although more measures will be needed Public Sector Deficit (percent of GDP) - Active scenario - Authorities CP (May 11) Staff baseline -6-8 17 Notes: The baseline includes identified measures announced to -1 8 9 1 11 1 13 1 15 16 Source: Eurostat; Ministry of Finance; and IMF staff estimates.
to bring down public debt decisively. Public Sector Debt (percent of GDP) 7 6 5 Authorities CP (May 11) Staff baseline Active scenario 3 18 Notes: The baseline includes identified measures announced to date. A 1 percent interest-growth differential is assumed in the long run. 8 1 1 1 16 18 Source: Eurostat; Ministry of Finance; European Commission; and IMF staff estimates.
Current account deficit is widening Current Account Balance (percent of GDP, four quarter rolling sum) 6 - - -6-8 Transfers Income Services Goods Current account 19-1 7Q1 8Q1 9Q1 1Q1 Source:National Bank of Poland.
but is largely financed with EU funds and FDI Current Account Balance, Transfers, and FDI (percent of GDP, four quarter rolling sum) 7 6 5 Capital transfers, net Current account deficit FDI, net 3 1 7Q1 8Q1 9Q1 1Q1 Source:National Bank of Poland.
Competitiveness was corrected sharply Real Effective Exchange Rate (ULC based, Q1=1) 15 1 13 Czech Rep. Germany Hungary Poland Slovakia 1 11 1 1 9 Q1 5Q1 6Q1 7Q1 8Q1 9Q1 1Q1 Source: Eurostat.
Perception of Polish risk is relatively low Credit Default Swap Spreads (basis poits) 7 6 5 Poland Hungary Czech Republic Slovak Rep. 3 1 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Source:Bloomberg.
Portfolio flows now dominate capital inflows Financial Account Balance (percent of GDP, four quarter rolling sum) 1 1 1 8 6 - Other investments Portfolio FDI Financial account 3-7Q1 8Q1 9Q1 1Q1 Source:National Bank of Poland.
Thank you