Poland Business Forecast Report Q3 2012

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Reforms On Course Despite Growing Opposition
In light of parliament's passage of important pension reforms in May, we continue to believe that the Polish government will maintain its
austerity drive despite growing opposition and strains within the ruling coalition
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
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Investment Slowdown To Drag On Growth
We forecast Polish real GDP growth to slow from 4 3% in 2011 to 2 5% this year, substantially below consensus expectations Fiscal
consolidation and slower investment growth will make Poland more vulnerable to a contraction in the eurozone
TABLE: GDP BY EXPENDITURE
Fiscal Policy
Fiscal Deficit To Narrow But Miss 3% Target
We expect Poland to narrow its budget deficit from 5 1% of GDP in 2011 to 3 4% of GDP in 2012, missing its target of 2 9% of GDP
However, the public debt will not breach the 55% of GDP debt ceiling, and is on course to fall gradually from 2013 onwards
TABLE: FISCAL POLICY
Balance Of Payments
Deficit Narrowing Slightly, But Well Funded
We expect Poland's current account deficit to narrow from 4 3% in 2011 to 4 0% of GDP in 2012 as a slowing domestic demand
offsets the effect of weakening external demand on the trade balance, and the service sector benefits from the European football
championship
TABLE: CURRENT ACCOUNT
Monetary Policy
Rates To Be Held For 2012
We now forecast that the National Bank of Poland (NBP) will hold rates at 4 75% in 2012, having surprised the market with 25-basispoint
hike on May 9
TABLE: MONETARY POLICY
Chapter 3: 10-Year Forecast
The Polish Economy To 2021
Favourable Growth Dynamics To Remain Over The Longer Term
We believe the Polish economy will continue to expand at a healthy clip over our 10-year forecast period, with average annual real
growth of 4 2% during 2015-2021 This will primarily be driven by ongoing economic convergence with Western Europe
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
TABLE: BMI LEGAL FRAMEWORK RATING
Infrastructure
TABLE: LABOUR FORCE QUALITY
TABLE: EMERGING EUROPE – ANNUAL FDI INFLOWS
TABLE: TRADE AND INVESTMENT RATINGS
Market Orientation
TABLE: TOP EXPORT DESTINATIONS
Operational Risk
Chapter 5: Key Sectors
Defence & Security
TABLE: MANPOWER AVAILABLE FOR MILITARY SERVICES (AGED 16-49, UNLESS OTHERWISE STATED)
TABLE: DEFENCE EXPENDITURE
Freight Transport
TABLE: FREIGHT KEY INDICATORS
Other Key Sectors
TABLE: AUTOS SECTOR KEY INDICATORS
TABLE: FOOD & DRINK SECTOR KEY INDICATORS
TABLE: INFRASTRUCTURE SECTOR KEY INDICATORS
TABLE: OIL & GAS SECTOR KEY INDICATORS
TABLE: PHARMA SECTOR KEY INDICATORS
TABLE: TELECOMS SECTOR KEY INDICATORS
Chapter 6: BMI Global Assumptions
Global Outlook
Muddling Along, As Expected
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES REAL GDP GROWTH FORECAST
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST 45