By Tim Ash, Standard Bank
It has been easy in recent weeks to get carried away with big emerging market (EM) currency movements. A range of them – including the Russian rouble, Turkish lira, Polish zloty, South African rand and Brazilian real – have hit their lowest point this year against the US dollar.
But this is mostly about the dollar’s recovery, the broader US recovery and assumptions that the US Federal Reserve is way ahead of the European Central Bank (ECB) in terms of policy normalisation. Indeed, the ECB seems still to be going the other way, loosening monetary policy; the euro also appears to be on a hiding to nothing.
So who will be the winners and losers from the dollar’s recent ascent?
By Marcin Piatkowski of the World Bank
Today, Poland is celebrating the 25th anniversary of elections that ushered in a new Solidarity-led government, the first democratic government behind the Iron Curtain.
In 1989, the newly democratic Poland faced unprecedented economic challenges. Despite attempts at reforms, the country was bankrupt, inflation was rampant and industry outdated and inefficient, exporting less than $10bn worth of steel, coal and ships. Agriculture employed a quarter of the workforce. Despite the general enthusiasm, many feared economic disaster.
A quarter of a century later, Poland is the most successful economy in Europe. Read more
Economic growth in emerging Europe surged in the first quarter as Germany’s dynamism drove manufacturing output and fears of that the Ukraine crisis would exert a damping did not materialise, data announced on Thursday showed.
“In spite of fears of spillovers from the crisis in Ukraine, there are no signs (so far a least) that this has affected the recovery in Central and South Eastern Europe,” said William Jackson, emerging markets economist at Capital Economics in London.
Four out of six emerging European countries to report preliminary GDP growth data showed a significant expansion in the first quarter year-on-year (see chart). Hungary, Poland, Slovakia and the Czech Republic posted an acceleration in GDP growth, while Romania and Bulgaria slipped back. Read more
Poland’s economy turned in an unexpectedly strong performance last year, growing by 1.6 per cent according to data released Thursday, but that did not stop the zloty from losing strength against the dollar and euro amid continued emerging market worries.
The economy’s expansion surprised on the upside – most analysts had pencilled in only about 1.5 per cent growth. The final result for the year was also significantly higher than had been expected just a few months ago, when first quarter growth slowed to only an annual 0.5 per cent. Read more
Poland’s central bank has already indicated that there is not much chance of it increasing record-low interest rates before mid-2014, and Friday’s unexpectedly low inflation readout will do little to change that assessment. Read more
The strong showing by Poland’s economy in the third quarter of this year includes encouraging news for Poland bulls: domestic demand is an increasingly important factor in an economy that has been largely sustained by export growth.
New details on the economy come from the government’s statists agency, which took a closer look at earlier released flash GDP numbers. Those showed the economy expanding by an annual 1.9 per cent in the third quarter, up from 0.8 per cent in the second quarter. Read more
By Jan Krzysztof Bielecki
In a famous joke from the communist era, a listenersends in a question to a Soviet radio station: “Is it true that cars are being given out for free on Moscow’s Red Square?”. “Generally speaking, yes – it’s true”, was the initial response. But then came a more detailed answer: “It’s happening in Leningrad, not Moscow; it’s bicycles, not cars; and they’re being stolen, not given out.”
The same can be said of somearticles published recently about Poland’s plans to reform its pension system. Generally speaking, yes – part of the assets will be transferred to a pay-as-you-go system. But the rest of the picture painted by the authors of those texts is about as true as the great car giveaway in Red Square. Read more
The numbers are not head-turners, but the latest retail sales data out of Poland show the country continuing a steady, if unspectacular, economic revival – which means continued support for current low interest rates.
Retail sales in September grew by an annual 3.9 per cent, below analysts expectations of 4.7 per cent but still enough to show that the economy is rebounding from a sharp slump in the first half of the year. Read more
Poland’s economic recovery is gathering steam, with new industrial production numbers showing that growth in central Europe’s largest country is picking up sharply.
September’s industrial production was accelerated to 6.2 per cent on an annual basis, up from 2.2 per cent in August. Read more
Most people looking at a global economy buffeted by five years of crises and turmoil would be loath to call this a “Golden Age”. But that is just what Poland is experiencing, according to a new World Bank paper.
Marcin Piatkowski, a World Bank economist, makes the fairly convincing argument that central Europe’s largest economy is enjoying its greatest period of stability since the country appeared on the map of European history more than a thousand years ago. Read more
No surprise from the National Bank of Poland’s rate-setting Monetary Policy Council on Wednesday after it decided not to budge from the current record low benchmark of 2.5 per cent.
With signs that the economy hit bottom in the first quarter of this year and has since been slowly recovering, the chances of any action on the part of the MPC were fairly minimal. Read more
Polish premier Donald Tusk recently announced that Poland’s economic slump was over and predicted a return to faster growth, but that message doesn’t seem to have got through to the thousands of angry labour union activists who descended on Warsaw on Wednesday for several days of anti-government protests. Read more
With its back pressed against the fiscal wall by an unexpectedly sharp economic slowdown, Poland’s government on Wednesday took an axe to part of the country’s pension system in a bid to bolster public finances.
Premier Donald Tusk said that part of the country’s obligatory pension system run by private funds would be dramatically revamped, with 120bn zlotys ($37bn) in government bonds held by the 14 funds being transferred to the government pension scheme and cancelled, which will reduce public debt by about 8 percentage points from its current 55 per cent of gross domestic product. Read more
Poland’s economic slump is over – that’s the word from Donald Tusk on Tuesday at an annual economic forum in the Polish mountain resort town of Krynica, announcing the start of an economic rebound that may also bolster the Polish premier’s sagging political fortunes. Read more
Is Poland’s sluggish economy on the road to recovery? There were further signs that it might be on Tuesday, as retail sales in June showed a bigger than expected expansion of 1.8 per cent compared with the same month last year, and unemployment continued to edge down. Read more