Poland Country Risk Report Q1 2016
Poland’s robust real GDP growth will continue throughout 2016, driven mainly by household consumption, but also by government spending too.
The sharp drop in oil prices has led to a positive adjustment in Poland’s external accounts, although growing domestic demand will lead the current account deficit to widen in 2016.
The new Law and Justice government will result in a slight widening in the fiscal deficit and looser monetary policy.
Major Forecast Changes
On the back of the sharp drop in oil prices, we have upgraded our forecast for Poland’s current account deficit to just 0.1% of GDP in 2015.
We have downgraded our fiscal forecasts following the general election result of October and now expect the fiscal deficit to come in at 2.9% of GDP in 2016 (from 2.5% previously) and 3.0% in 2017 (from 2.0% previously).
- Executive Summary
- Core Views
- Major Forecast Changes
- Key Risks
- Chapter 1: Political Outlook
- SWOT Analysis
- BMI Political Risk Index
- Domestic Politics
- Parliamentary Election: Initial Thoughts
- With Law and Justice leading Poland's next government, a slight widening of the fiscal deficit and looser monetary policy is now our
- base case.
- TABLE: POLITICAL OVERVIEW
- Long-Term Political Outlook
- A Maturing Regional Power
- We consider Poland's long-term political risk profile to be on an upward trajectory, reflecting the country's maturing political institutions
- and greater confidence in the conduct of external affairs. Solid macroeconomic fundamentals underpin our expectation for improvement
- over the long run. Nevertheless, Poland still faces significant challenges to political stability in its external relations and at home.
- Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Index
- Economic Growth Outlook
- Government To Expand Role In Economy
- The incoming Law and Justice government will boost household consumption and the state's role in the economy, although fixed
- investment may suffer.
- TABLE: GDP BY EXPENDITURE
- Fiscal Policy And Public Debt Outlook
- PiS Victory Signals Wider Budget Deficits Ahead
- We have revised down our fiscal deficit forecasts, anticipating a wider budget deficit as a result of the new Law and Justice government.
- TABLE: FISCAL POLICY
- Monetary Policy
- Monetary Policy To Remain Looser For Longer
- Monetary policy will be looser in 2016 as a result of the new Law and Justice government. While our core view remains that there will be
- no rate hikes in 2016, the rise of deeper cuts and unorthodox monetary policy being implemented has risen.
- TABLE: MONETARY POLICY
- Currency Forecast
- PLN: Strong Fundamentals Will Support Against Volatility
- Although the new PiS government is likely to be negative in the short term for the zloty, a more sustained depreciation will be prevented
- by the country's robust fundamentals.
- TABLE: EXCHANGE RATE FORECASTS
- Chapter 3: 10-Year Forecast
- The Polish Economy To 2024
- Long-Term Future Looks Bright
- We forecast Polish real GDP growth to average 3.5% between 2016 and 2025 , down slightly from 4.0% between 2001 and 2011.
- TABLE: LONG-TERM MACROECONOMIC FORECASTS
- Chapter 4: Operational Risk
- SWOT Analysis
- Operational Risk Index
- Operational Risk
- TABLE: OPERATIONAL RISK
- TABLE: EMERGING EUROPE - EDUCATION RISK
- TABLE: GRADUATES OF TERTIARY EDUCATION, 2008-2012
- Government Intervention
- TABLE: EMERGING EUROPE - GOVERNMENT INTERVENTION RISK
- TABLE: PERSONAL INCOME TAX BRACKETS
- Chapter 5: BMI Global Macro Outlook
- Global Outlook
- Exit The Dragon
- TABLE: GLOBAL ASSUMPTIONS
- TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
- TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
- TABLE: EMERGING MARKETS, REAL GDP GROWTH, %