Investment Research General Market Conditions

Transcription

1 Investment Research General Market Conditions Macro Monitor Poland On the following pages we present our new Macro Monitor on the Polish economy. It contains an updated outlook on the Polish economy taking into account the latest economic releases for May and June. In general, economic activity should continue to decline in the coming quarters. GDP growth should move into negative territory in Q 9 and most likely bottom out in Q and Q 9. Although the Polish economy has not been as hard hit in terms of drop in economic activity, there are not clear signs of a swift recovery. We expect GDP growth of -.% y/y in 9 and.% y/y in. Private consumption should decline in the coming quarters on the back of a continuing deterioration in labour market conditions. This will play a key role in the recovery for the Polish economy. We are possibly looking at a year of contraction in private consumption and a slow recovery starting in H. Investments, on the other hand, should bottom out in Q and Q 9 and then gradually begin to move up. The drop in economic growth and the expected slow recovery is likely to have a significant negative impact on the Polish labour market. Unemployment is expected to rise to.% in 9 and further to.% in. On the positive side, low capacity utilisation should reduce inflationary pressure for some time. Macro forecast Year Gdp() Private. cons() Fixed Inv() Export(), () Import(), () ) A verage % y/y ) % of GDP ) % o f total wo rk force ) Expo rt and import prices, EUR Macro forecast Year Trade Balance(), () Current acc.(), () Industrial prod.() Unemploy ment() Wages() Inflation() ) A verage % y/y ) % of GDP ) % o f to tal wo rk fo rce ) Expo rt and impo rt prices, EUR Chief analyst Lars Christensen + 8 larch@danskebank.dk Assistant analyst Jens Nærvig Pedersen + 88 jenpe@danskebank.dk

2 Economic growth Gross domestic product 8 - Gdp, Poland The Polish economy has not been as hard hit in terms of decline in economic growth compared with its neighbours. However, our models indicate that GDP growth will move into negative territory in Q 9. Furthermore, GDP growth should bottom out in Q and Q 9 and then begin a slow and gradual recovery. Overall, we expect GDP growth of -.% y/y in 9 and.% y/y in. Private consumption Private consumption has been holding up surprisingly well. However, that should end due to continuing deterioration of labour market conditions. - Private consumption, Poland Negative real wage growth and rising unemployment is likely to push consumption growth into negative territory. We expect consumption growth of.% y/y in 9 and -.% y/y in. Investments - - Fixed investments, Poland Investments have declined rapidly over the past couple of quarters due to weak production and export and tighter credit conditions. We expect the decline in investments to continue in Q and Q 9 and then gradually begin to move up. Overall, investments should contract by.9% y/y in 9 and grow by.8% y/y in.

3 External balances Export and import Import, Poland Export, Poland Exports have declined sharply. However, PMIs in the euro area are beginning to recover further and so could Polish exports. We expect Polish export growth of -.% y/y in 9 and -.8% y/y in. Imports have followed the same trend as domestic demand has dropped. Polish import growth should be -.% y/y in 9 and.% y/y in. Trade balance.. EUR Bn. Trade balance, Poland The trade balance has improved.. fast over the past couple of months Exports should rebound faster than imports, helped by a weaker currency which improves Polish competitiveness and thereby the trade balance We expect the trade balance to be at a level around -.% of GDP the coming years. Current account. % of GDP % of GDP. Current account The current account balance will be helped by the sharp improvement in the trade balance and should thus be improved in the coming quarters. The current account deficit should improve to -.% of GDP in 9 and -.% of GDP in

4 Production and labour market Industrial production Industrial production, Poland It looks as if the worst is over for Polish industrial production after the significant drop in H 9. Overall, we expect industrial production to begin to recover in H 9 and on average to have contracted by.% y/y in 9 and then to grow by.% y/y in Unemployment % % Unemployment, Poland Unemployment has begun rising as economic activity has dropped. We do not expect Polish economic growth to rise above trend growth in the near future and thus this trend should continue for some time. Unemployment is expected to rise to.% in 9 and further to.% in.

5 Wages and prices Wages Wages, Poland As a result of the drop in economic activity and the rising unemployment, wage growth has slowed sharply. According to our models, wage growth is beginning to bottom out. However, it should remain at the current low level for some time. We expect wage growth of.8% y/y in 9 and.% y/y in. Inflation Inflation, Poland Inflation dropped sharply in the beginning of 9 and it looks as if it has stabilised and this should not change in the rest of 9. We expect inflation to drop within the Polish central banks inflation target of.% y/y +/- pp in H and inflation at.% y/y in 9 and down to.% y/y in due to a base effect and below trend growth.

6 Emerging Markets Contacts Emerging Markets Research Lars Christensen + 8 larch@danskebank.dk Flemming Jegbjærg Nielsen + 8 flemm@danskebank.dk Violeta Klyviene + 99 vkly@danskebank.com Lars Tranberg Rasmussen + 8 laras@danskebank.dk Stanislava Pravdova + 8 spra@danskebank.dk Jens Nærvig Pedersen jenpe@danskebank.dk Emerging Markets Sales, Danske Markets Stephen A. Ryan sry@danskebank.dk Ulf Rafstedt + ulra@danskebank.dk Erik Rasmussen + eras@danskebank.dk Global Retail SME, FX Stig Hansen + 8 sh@danskebank.dk Flemming Winther + 8 flw@danskebank.dk Trading FX, Fixed Income, Danske Markets Frank Sandbæk Vig + 9 fsv@danskebank.dk Thomas Manthorpe tman@danskebank.dk Markku Anttila +8 8 markku.anttila@sampopankki.fi Perttu Tuomi perttu.tuomi@sampopankki.fi Danske Bank Poland, Warsaw Marciej Semeniuk +8 msem@pl.danskebank.com Bartłomiej Dzieniecki +8 bdz@pl.danskebank.com Danske Markets Baltics Howard Wilkinson +8 9 howard.wilkinson@danskebank.com Martins Strazds + martins.strazds@danskebanka.lv Giedre Geciauskiene + 8 giedre.geciauskiene@danskebankas.lt Lauri Palmaru + lauri.palmaru@sampopank.ee ZAO Danske Bank Russia, Saint-Petersburg Treasury Department Antti Urvas + 8 antti.urvas@sampopankki.fi Vladimir Biserov + 8 vladimir.biserov@danskebank.ru Darja Kounina + 8 darja.kounina@danskebank.ru All EM research is available on Bloomberg DDEM

7 Disclosure This report has been prepared by Danske Research, which is part of Danske Markets, a division of Danske Bank. Danske Bank is under supervision by the Danish Financial Supervisory Authority. The authors of this report are Lars Christensen, Chief Analyst, and Jens Nærvig Pedersen, Assistant Analyst. Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high quality research based on research objectivity and independence. These procedures are documented in the Danske Bank Research Policy. Employees within the Danske Bank Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to Research Management and to the Compliance Officer. Danske Bank Research departments are organised independently from and do not report to other Danske Bank business areas. Research analysts are remunerated in part based on the over-all profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or dept capital transactions. Danske Bank research reports are prepared in accordance with the Danish Society of Investment Professionals Ethical rules and the Recommendations of the Danish Securities Dealers Association. Risk warning Major risks connected with recommendations or opinions in this report, including as sensitivity analysis of relevant assumptions, are stated throughout the text. First date of publication Please see the front page of this research report for the first date of publication. Disclaimer This publication has been prepared by Danske Markets for information purposes only. It has been prepared independently, solely from publicly available information and does not take into account the views of Danske Bank s internal credit department. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. The Equity and Corporate Bonds analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for retail customers in the UK or any person in the US. Danske Markets is a division of Danske Bank A/S. Danske Bank A/S is authorized by the Danish Financial Supervisory Authority and subject to limited regulation by the Financial Services Authority (UK). Details on the extent of our regulation by the Financial Services Authority are available from us on request. Copyright Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.