Blog by Michael Clay

Poland Improving Amid Crisis

Mid-September marked two years since the Lehman Brothers bank filed for bankruptcy, an event that had triggered the worst financial crisis around the world since the Great Depression. The turbulence on global financial markets led to the spectacular collapse of a string of high-profile financial institutions and large companies. Some countries found themselves in serious trouble. Greece even faced a threat of bankruptcy.

Poland, meanwhile, avoided most of these problems and was one of the few developed countries that did not plunge into recession. Paradoxically, Poland’s international profile improved thanks to the crisis. Financial markets started to perceive Poland as a large and growing European economy rather than merely a part of Central and Eastern Europe.

The improvement in Poland’s ratings abroad is coupled with an increased interest in the country among investors. According to the Polish Information and Foreign Investment Agency (PAIiIZ), in the first half of this year, foreign direct investment in the country was more than 80 percent higher than in the same period of 2009, even though 2009 was quite a good year in terms of FDI.

What attracts investors to Poland is that its economy is growing despite the global crisis. But the fact that the Polish economy is increasingly open and competitive is also an important factor. In a league table compiled by the World Economic Forum, Poland is ranked 39th among 139 economies in terms of competitiveness, ahead of Italy, Spain and Portugal, but behind the Czech Republic and Estonia. Although this 39th place does not seem to measure up to Poland’s potential and aspirations, the country has made significant progress compared with the previous league table in which it ranked 46th.

In producing its tables, the World Economic Forum takes into account economic statistics and views expressed by business executives. It uses criteria such as the quality of the institutional environment, the legal and administrative framework in which businesses operate, the quality of infrastructure, education and the health service, technology and innovation. Poland traditionally receives poor marks for the state of its infrastructure. Innovation is not a strong point of the Polish economy, either. In this year’s league table, Poland ranks 53rd in terms of innovation. The reason is that there is no tradition of collaboration between business and science in Poland. In developed economies, a third of the money spent on innovation comes from the state budget and two-thirds from private companies. The size of spending on innovation is another important factor. In Poland, this spending accounts for 0.6 percent of GDP, compared with around 3 percent of GDP in Switzerland and Japan. This shows that Poland still has a long way to go to become an innovative country.

Polish GDP to Grow 3.1% in 2010: IMF

The Polish economy is likely to grow 3.1% this year and 3.5% next year, according to the International Monetary Fund’s latest World Economic Outlook report.

Poland should continue structural reforms, make the structure of public finances more flexible and complete reforms of its pension system, International Monetary Fund analysts said.

In an early draft of next year’s budget, the government assumes GDP will grow 3.5% and average annual inflation will rise 2.3% , the PAP news agency reported.

The government expects domestic demand to be the main driver of economic growth in 2010, according to PAP.

Government experts believe exports remain something of an unknown, with many risks to the European growth outlook, PAP said.

It added that the government expected the zloty to appreciate as sentiment on global financial markets calms down and the economy returns to a path of growth.

Poland must avoid tax hikes and focus on spending cuts, including adjustments to legislatively fixed spending, according to Finance Ministry documents cited by PAP.

Under the Polish constitution, the 2011 budget must be put to parliament by the end of September.

Poland to Receive Over EUR 10 bn From Cohesion Funds

Poland will receive EUR 10.2 bln from the EU cohesion fund in 2011, according to the draft EU budget accepted by the European Commission on Tuesday.

The total pool of cohesion and structural funds in 2011 will amount to EUR 42 bln out of a EUR 142 bln budget, i.e. 17% more than in 2010.

The draft budget assumes an unprecedented increase in spending on cohesion policy in 2007-2013 financial perspective, Commissioner for Financial Programming and Budget Janusz Lewandowski said.

"Cohesion policy is anti-crisis policy," he added.

These funds from the EU are a wonderful opportunity for Poland to develop the infrastructure and ensure a firm place for the future BUT somehow the process of spending this funding is taking on a very slow processing system.

Unless the powers that be, begin to work much more quickly at utilising these funds and spending them on a properly planned basis, the money will be withdrawn. It is a question of 'Use it' or 'Lose it

The time has surely come for the spending of this money and not the constant delays and indecision which are plaguing the system.

Poland's GDP to Grow by 2.75 pct This Year – IMF Forecast

Poland's economy is expected to grow by 2.75% in 2010 and 3.25% in 2011, the latest IMF forecast shows.

"We expect a revival in the domestic demand, especially in public investments," IMF noted. "The economy is still below potential and wage growth is limited by increased unemployment."

IMF expects inflation to be contained, the report also noted.

All the signs are right for Poland and yet still the British Exports to Poland are at a low level. WHEN will the British SME's and even larger firms realise that the potential to do business in Poland is just waiting for them to take action.

Now is such an ideal time for businesses to open up in Poland - now more than ever is the time to establish a business in Poland or export product there whilst UK sterling prices are at an all time low.

Please do contact us at Export Poland for a free consultancy on YOUR opportunity in Poland - you may be surprised at the result.

European Commission Predicts Poland's GDP Growth Highest in EU

Poland's GDP is expected to grow by 2.6% in 2010 versus 1.8% forecast earlier, while HICP is seen at 2.3% vs November assumption for 1.9%, the European Commission's revised forecast shows.

"The recovery would continue to be driven by exports, which will benefit from the rebound in external demand and the lagging positive effects of the past exchange rate depreciation," the interim forecast reads.

The FX effect will however gradually fade away and domestic demand will become the main driver of growth in 2010, the forecast reads on.
Investment is projected to recover slowly after the drop recorded in 2009, which will reflect "robust public spending in capital expenditure, firming-up production expectations and improved perception of the Polish economy among foreign investors," the EC forecasts.

"Private consumption is expected to contribute moderately positively to growth," supported by a marked increase in social transfers and better-than-expected developments in the labor market.

No Chance for Poland to Adopt Euro Before 2015 - GD ECFIN Official

Poland will likely be able to adopt the euro only beyond 2015, a high official from the Directorate-General for Economic and Financial Affairs told PAP.

"Poland practically has no chances of entering the euro zone ahead of 2015," the official said. "It is a rather common opinion among economists and EU decision-makers.

Based on the EU autumn forecast, Poland will have problems with meeting the fiscal criterion in the next 2-3 years, the official stressed.

"The EC recommendation indicates that your country should decrease the general government deficit to 3% of GDP in 2012 - it is to some point possible but in our opinion it will be difficult and the opinion that Poland might want the EC to change its recommendation to at least 2013 is common," the official added.

The European Commission expects this deficit to stand at 6.4% in 2009, at 7.5% in 2010 and at 7.6% in 2011, in the absence of government actions regarding the fiscal policy.

First we are advised that 2012 will be the date for adopting the Euro and then 2015 and now we have a new target date of some time after 2015. When will Poland really be in a position to adopt the euro and how will this affect it's economy?

Will the Polish people really welcome the euro?, and perhaps see the costs of everyday life increasing as they have done in all other counties that have already adopted the currency.

PKO BP Sells Over zl.1bn in Mortgages in October

PKO BP bank sold over zl.1 billion in mortgage loans in October, vice president Wojciech Papierak told the PAP news agency.
"Both in September and October sales of mortgage loans exceed zl.1 billion," Papierak said.
The bank said earlier that mortgage sales in Q3 totaled around zl.3.2 billion.

Here in the UK PKO BP has new products to offer both UK residents both Polish and British. Being forward thinking, they are able to provide mortgage loans to buyers of property in Poland with excellent facilities of up to 100% LTV.

At a seminar at PKO's offices in London, at which Michael Clay spoke about the property market in Poland, the range of loan facilities was unveiled. These included a service providing mortgages to Employees, Self employed and Directors of Ltd UK companies.

This seems to be a great step forward for PKO in their efforts to increase business with the UK investor market and whilst in PLN the interest rates should prove to be very competitive.

Contact can also be made with DKM Real Estate in London on +44 (0)208 621 4000 and online at www.dkm.pl. They are abe to provide a member of staff free of charge to help potential borrowers to complete bank application forms.

Economic Fundamentals Point to Stable Zloty - NBP Chief

Poland's economic fundamentals suggest that the zloty should be one of the most stable currencies in the region, although a a high dose of uncertainty exists, central bank NBP head Sławomir Skrzypek told reporters.

"The fundamental of our economy are strong and the zloty has every basis to be stable, one of the most stable currencies in the region," NBP CEO said, offering caveat for a "level of uncertainty on the market that makes any declaration difficult."

Now the Polish Zloty Returns to Appreciation Trend

Poland's zloty started gaining Monday night and will likely continue down that road locals told PAP.

Positive global sentiment, large IPOs by PKO BP bank and PGE power as well as EU funds conversion all contribute to the zloty returning to appreciation trend, Kredyt Bank FX dealer Robert Kęsicki said.

The trend should hold in the coming days, in Kęsicki's opinion.

It seems that every winter the zloty becomes stronger and very summer weaker - is this a normal trend or what is it that influences this phenomena

Poland Sees GDP Growth in Q3 Again

Poland's economy is expected to have grown by some 1% in Q3, deputy Finance Minister Ludwik Kotecki told PAP.

Q2 GDP growth amounted to 1.1%. In late August Kotecki said Q3 result would be lower than the Q2 reading.

Once again, Poland looks like being the LEADING economy within Europe with a GDP that many of the other EU nations would just love to be able to show. How can Poland do this every quarter this year to date when others have failed so miserably?

Perhaps it is the mindset of the Polish Government and its determination to learn from the mistakes that the Western nations have made. Perhaps it is the constant message to the Polish people that they must be aware of the dangers around them in overspending.

Whatever the message is, it seems to be working.

Polish Government Approves Draft 2010 Budget

The budget bill which was passed by the cabinet yesterday leaves the budget deficit intact at 52.2 billion zlotys, "large but safe." as called by the Finance Minister Jacek Rostowski.

The government assumes budget receipts in 2010 at 248.87 billion zlotys versus 245.50 billion zlotys in the earlier draft and increases spending to 301.08 billion zlotys from 297.72 billion zlotys.

Budget revenues will be most affected by decrease in VAT receipts, tax deductions for bio-components, increased excise on cigarettes as well as PIT and CIT changes related to use of company cars, the statement on the budget said.

Poland's economy will grow by 2.8% in 2011, 3% in 2012 and 3.4% in 2013, according to the approved budget bill .

I guess the consumer ends up paying the increases in taxation on Cigarettes, Beer, Wines and Alcohol as well as probable increase in Petrol prices.