2. 2
GDP
Poland went smoothly trough
the first phase of the
global/European economic
slowdown but then …
Consumption – „0”
contribution to GDP growth
recently (deteriorating
situation on labour market,
postponed private
consumption).
Investments – dragging on,
Euro 2012 hangover, public
finance tensions.
Counter cyclical character of
net export, driven by import –
weakness of domestic
consumption.
0,8
-6
-4
-2
0
2
4
6
8
10
12
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2005 2006 2007 2008 2009 2010 2011 2012 2013
Individual final consumption expenditure
Public final consumption expenditure
Gross fixed capital formation
Changes in inventories
Net exports
GDP
GDP by expenditure
Contribution %, YoY
Source: Central Statistical Office
2012 UEFA European
Football Championship
4. 4
Current account
Positive trade balance – weak domestic demand – import, favourable FX rate for exporters, increasing economic
openness (export share in GDP 49% in 2013 vs. 39% in 2009 and 45% in 2011).
Strong current account data likely to support PLN.
In case of rapid PLN drop CB intervention possible – precedence intervention 7th of Jun, NBP’s comment: ”action
as an attempt to prevent excessive currency moves”.
Current account and trade balance
bn EUR
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2
2005 2006 2007 2008 2009 2010 2011 2012 2013
Current account balance Trade balance
Source: NBP (National Bank of Poland)
0
1
2
3
4
5
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2
2005 2006 2007 2008 2009 2010 2011 2012 2013
EUR/PLN USD/PLN
PLN exchange rates
Quarterly averages
6. 6
EU money
New UE budget for
2014-2020, Poland will
receive EUR 105.8bn
(EUR 4.5bn more vs.
years 2007-13),
including EUR 73bn EU
of cohesion funds or
around PLN 44bn a
year (c.a. 3% of GDP)
vs. EUR 67bn in 2007-
13.
2013 and 2014 sound
recovery – w/o EU
funds support.
EU money impact on GDP growth in Poland
GDP %; EU money impact on GDP growth %
Source: Central Statistical Office, Instytut Badań Strukturalnych
KBC forecasts
7. 7
Inflation
Lack of inflation
pressure due to weak
labour market
situation, positive
impact of regulated
prices (electricity, gas
tariffs).
Negative output gap to
2015 – Central Bank
forecasts.
0
1
2
3
4
5
6
7
jan/07
apr/07
jul/07
okt/07
jan/08
apr/08
jul/08
okt/08
jan/09
apr/09
jul/09
okt/09
jan/10
apr/10
jul/10
okt/10
jan/11
apr/11
jul/11
okt/11
jan/12
apr/12
jul/12
okt/12
jan/13
apr/13
jul/13
CPI (%, YoY) Core CPI (%, YoY) Reference rate
Inflation and interest rates
CPI, Core CPI, Reference rate
Source: Central Statistical Office, NBP (National Bank of Poland)
8. 8
Summary of our forecasts vs. consensus
KBC forecasts
Source: Bloomberg, KBC TFI S.A., other mentioned sources
BB annual consensus forecasts
BB quarterly consensus forecasts
2013 2014
GDP 1.1 2.2
CPI 0.9 1.8
10Y GOVERNMENT BONDS YIELD (EOP) 3.80 4.40
2013 2014 Data
Bloomberg 1.3 2.5 Aug 13
European Commission 1.1 2.2 May 13
IMF 1.3 2.2 Apr 13
NBP (Central Bank) 1.1 2.4 Jul 13
Ministry of Finance 2.2 2.5 Oct 12
OECD 0.9 2.2 May 13
World Bank 1.5 Jan 13
Selected GDP forecasts
9. 9
Central Bank forecasts
GDP
Contribution, % YoY
Source: Polish Central Bank (NBP)
50% probability range:
CPI in 2013 0,6-1,1% (vs. March forecasts 1,3-1,9%), and 0,4-2,0% in 2014 r. (vs. 0,8-2,4%)
real GDP growth 0,5-1,7% in 2013 (vs. March forecast 0,6-2,0%), 1,2-3,5% in 2014 (vs. 1,4-3,7%).
CPI inflation
% YoY
11. 11
Summary
Macroeconomic situation :
stronger consumption growth on the back of improving labour market situation – sustainable, and
postponed durable goods spending – non sustainable,
fixed investments – recent data from large companies suggest some improvement is under way but we do
not expect an increase in investment demand before 2014,
positive net export contribution will gradually decline as the recovery will progress,
lack of inflation preassure in the mid run.
Monetary policy
we expect interest rates to remain on hold at least until mid-2014 and we see a risk that the beginning of
the tightening cycle could be delayed even further.
Other:
public finance: some fiscal discipline despite slowdown (fiscal balance: our forecast -4.5% vs. -3.5 planned),
quasi nationalization of the pension funds assets (bonds’ part of the portfolio),
new EU budget for 2014-2020: Poland will receive EUR 105.8bn (EUR 4.5bn more vs. years 2007-13),
including EUR 73bn EU of cohesion funds or around PLN 44bn a year (c.a. 3% of GDP) vs. EUR 67bn in 2007-
13.