Weekly Market Analysis 02.02.2010

Economic growth slows to 1.7% in 2009

Poland’s GDP growth slowed in 2009 to 1.7% from 5.0% in 2008. The figure was in line with our expectations and slightly higher than the market consensus. In Q4 the growth rate reached 2.9%-3.2% and was much higher than in the previous three quarters.

Government presents programme to consolidate public finances
As expected, the government has presented a programme to consolidate public finances for the years 2010-2011. The programme includes a number of proposals aimed at increasing the transparency of public finances. Improving the management of public sector liquidity is an interesting and advantageous proposal.

Monetary Policy Council keeps interest rates on hold
As expected, the Monetary Policy Council has kept interest rates unchanged, with the reference rate still at 3.50%. The meeting in January was the first one attended by new Council members.

Zloty strengthens to the euro
Last week saw a strong appreciation of the zloty to the euro. At the beginning of this week, the EUR/PLN rate dropped to 3.9881, following a short-term correction to 4.10. The increased interest in the zloty was due to trends on international markets and partly to good macroeconomic data. Polish Treasury bills also strengthened on good macroeconomic results. The PMI and inflation figures released on Monday, Feb. 1, did not cause any significant changes on the market.

Polish Market

ECONOMIC MONITOR

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• ● In December 2009 and January 2010, as in previous months in the second half of 2009, the Polish economy stood out against other countries in terms of GDP growth. Poland’s economic growth was higher than projected and higher than in other European countries.
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• In 2009 construction output increased by 3.7%.
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• Retail sales increase in most product groups.
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• On the Warsaw Stock Exchange, stock prices were very volatile in January 2010.
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• At the end of December 2009 the registered unemployment rate (claimant count rate) amounted to 11.9% versus 11.4% in November.
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• At the end of January the president signed the 2010 budget bill into law. The bill was adopted by the parliament on December 18.
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• In the fourth quarter of 2009 the Polish economy turned out to be more resistant to the global crisis than had been projected and than the economies of Polish neighbours, something which boosts optimism in forecasts for 2010 and the next years.
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PODCAST

• Why do Israeli property developers pick Poland?

• New Polish president’s economic priorities

• Storm over homoerotic art show at Warsaw’s National Museum

• Poland’s new president Bronislaw Komorowski: a pragmatic, pro-business, euroenthusiast

• Poland and OECD innovation strategy

• How to make the Polish economy more innovative?

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WEEKLY MARKET ANALYSIS

No macroeconomic data for the Polish economy will be published at the beginning of this week. On Friday, the National Bank of Poland (NBP) will release balance of payment estimates for July. We think that the current account deficit was EUR750 million, a figure similar to that recorded in June. Bloomberg’s consensus forecast is EUR1,004 million.

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