Michał GórzyńskiCASE – Centre for Social and Economic

Research/ CASE-Doradcy

Zagreb, 26/04/2009

The impact of the global financial crisis on the industrial sectors of Poland. Main

aggravating factors of the crisis and possible solutions

Structure of the presentation

Economic overview of the Polish economyEconomic standing of the industry sector in

PolandSpecific of the Polish caseThe situation and the problems of the

banking sectorMeasures taken by the governmentPossible solutions

Polish GDP

Polish economic situation is relatively good comparing other European countries, but the economic forecasts are more and more pessimistic what results from the worse than expected economic condition of the world economy

GDP growth in 2008 + 4,8%; Contribution to GDP: consumption - +3,3, investments – +1,7, public investments – 0,1, foreign trade -0,1

Polish GDP 2009

Mid of 2008 – forecasts for 2009: +4,5%November – forecasts of MoF for 2009 (budgetary

act): +3,7%January 2009 – revision of MoF’s forecasts for

2009: +1,7%GDP growth in the first quarter 2009: + 0,3-0,4%Present forecasts from -0,7 (IMF) to + 1,5% (CASE)

% growth of VA according to the sectors (y-o-y)

Construction

Market service

s

Non-market services

Industry Agriculture

2008 11,3 5,6 1,2 3,2 3,2

IV Q 2008 4,8 5,1 3,2 0,9 3,6

Unemployment rate in %

Average employment in enterprise sector (y-o-y)

Dues (y-o-y)

Industrial new orders (y-o-y) - in %

Sold production (seasonally adjusted) - y-o-y

„Successful” branches Sold production (y-o-y) XII/2008-II/2009

„Most crisis infected” branches Sold production (y-o-y) XII/2008-II/2009

Nature of the „Polish crisis”…Non – economic crisisNon- banking crisis

Rather….

Foreign exchange rate crisis, which may be followed by economic and banking crisis

Problems of banksPolish banking sector, comparing to other

countries is in a relatively good condition: no toxic assets in the portfolio; Polish households repays regularly mortgage credits but…Many bank have foreign exchange mortgage credits in

the portfolio and depreciation of PLN as well as an increasing unemployment may be a problem…

Banking sector liquidity problem resulting from the lack of trust – recently the situation improved a bit…

Limitation of credit activity of the banking sector resulting from the capital adequacy ratio….

Nationally based banks vs. foreign owned banks

Financial results of the banking sector in Poland

Exchange rate 07/2008-03/2009

as a result of the foreign exchange crisis…

Significant financial losses of the enterprise sector resulting from the derivative instruments – 20 billion PLN (the cause of the speculative attack on the PLN)

In a long term possible deterioration of the banking sector’s economic standing

A few hundreds thousand households having mortgage credits in EUR or CHF (as a result decrease of the domestic consumption)

Deterioration of the economic standing of Polish importers

But on the other hand…

Significant increase of the Polish exports competitiveness (despite the decrease of the export)

Shift of the domestic demand towards domestic products (significant decrease of import) – reorientation of the Polish industry

Increasing competitiveness of the Polish economy for foreign investors (economic crisis in the Easter European countries, depreciation of PLN to Euro and USD, relatively huge internal demand)

Taken measuresBudgetary savings – the goal is to keep the budget

deficit and to meet EURO criterias- the Polish approach

Easing the monetary policy – e.g. decrease of the interest rate by the National Bank of Poland

PR activities - to present the real economic situation of the Polish economy (especially to financial investors form the largest fianncial institutions)

A declaration of the government to join ERM and to adopt Euro

Special IMF Flexible Credit Line - 21 billion USD (just in case)

Solutions/recommendationTo join Euro zone as soon as possibleTry to increase the credit aviability to the companies –

e.g. special govermnent’s credit lines to SMEsMore effective usage of the structural fundingTo keep the fiscal discipline – no money on the market

to finance the budgetary deficitMore restrictive monetary policy (the problem of

inflation may arise)Issue of supervising the banking sector in the global

dimensionImproving the regualtions concerning the banking

sector’s information policy about the derivatve products

To cross fingers for the world economy (first of all USA and German’s economies….)…..

Thank you for your attention

Michal.Gorzynski@case.com.pl