Emerging

A resilient economy

st  
Eco Emerging // 1 quarter 2021  
economic-research.bnpparibas.com  
1
9
POLAND  
A RESILIENT ECONOMY  
The second wave of Covid-19 that swept Poland in Q4 2020 was more severe than the first wave in Q2 2020. In  
contrast, economic growth was not hit nearly as hard thanks to the resilience of industrial output and demand  
(exports and household consumption). The authorities’ stimulus measures combined with industry’s competitiveness  
– which was not undermined much by the pandemic – bolstered growth, and the trade surplus increased. Against the  
background, a somewhat weak zloty is more a choice than a by-product of deteriorated fundamentals. The European  
budget agreement, as Poland is one of the main beneficiaries of the Recovery Plan, should provide additional support  
for growth.  
THE SECOND WAVE OF COVID-19 WAS MORE SEVERE THAN  
THE FIRST  
FORECASTS  
2
019  
2020e  
2021e  
2022e  
The curve of new Covid-19 cases and deaths suddenly worsened in  
October, with nearly 25,000 new cases a day. The Polish authorities  
responded by imposing a new lockdown as of November.  
Real GDP growth (%)  
4.1  
-3.3  
3.4  
4.9  
2.4  
4.3  
2.7  
Inflation (CPI, year average, %)  
Gen. Gov. balance / GDP (%)  
Gen. Gov. debt / GDP (%)  
2.4  
-0.7  
46.0  
0.5  
-9.0  
58.0  
4.0  
-5.0  
60.0  
2.1  
-2.8  
58.0  
1.5  
Limited primarily to retail stores, the new lockdown did not prevent  
manufacturing output from continuing to grow in November (5.1% year  
on year). It is now 3% higher than pre-Covid levels. This performance  
was mainly driven by automotive production and all of the sectors  
providing its inputs (plastics, metals, car suppliers).  
Current account balance / GDP (%)  
External debt / GDP (%)  
59.4  
114.5  
5.1  
56.8  
127.1  
6.5  
50.0  
133.3  
6.5  
46.0  
137.0  
6.2  
Forex reserves (EUR bn)  
Forex reserves, in months of imports  
Exchange rate EURPLN (year end)  
The dichotomy between underperforming services and resilient  
manufacturing is expected to persist since the virus is still spreading  
actively and new restrictions were introduced in January 2021 (including  
the closing of schools for a month). Moreover, the vaccination campaign  
will be rolled out in several phases (with the healthcare workforce to  
be the first to benefit), which does not augur well for herd immunity  
before mid-2022 at the earliest, according to the timetable that was  
presented. This suggests that the most highly exposed sectors will  
continue to underperform in the quarters ahead.  
4.3  
4.6  
4.3  
4.3  
e: ESTIMATE & FORECASTS  
TABLE 1  
SOURCE: BNP PARIBAS ECONOMIC RESEARCH  
MANUFACTURING PRODUCTION AND RETAIL SALES (LEVELS)  
Manufacturing production  
Retail sales  
140  
130  
120  
110  
GROWTH SHOULD HAVE OUTPERFORMED IN Q4  
Economic indicators have proven to be rather resilient. In terms of  
demand, exports seem to have been the main driver of Q4 growth  
(
+9% y/y in September and October), thanks notably to the automo-  
100  
tive industry. This is a remarkable performance considering that global  
exports of goods (excluding China) stagnated over the same period.  
Poland’s strong performance is notably due to its attractiveness for  
non-resident investors in recent years, which developed both its export  
potential and the size of its domestic market.  
9
0
0
8
70  
60  
07  
08 09 10 11 12 13 14 15 16 17 18 19 20  
SOURCE: CEIC  
As a result, the current account surplus swelled to 4% of GDP in 2020.  
During the year, there were no shocks to the country’s capital flows  
CHART 1  
(
even foreign direct investment held up fairly well), and Poland ma-  
naged to consolidate its foreign reserves, which facilitated the imple-  
mentation of an accommodative monetary policy.  
The labour market’s relatively strong performance is a major support  
factor for the resilience of household demand: the unemployment rate  
Household consumption also proved to be very resilient, levelling off was limited to 6.1% (vs a pre-Covid level of 5.4%) and wages have held  
in October and November near the September 2020 level, despite the up well. Consequently, unit labour costs rose sharply in Q2 (+10% y/y)  
shutdown of some retail segments. Poland is likely to be one of the rare before easing thereafter, although they are still holding at significant  
countries in which Q4 consumption was stronger than pre-Covid levels. levels (+5.4% in Q3). Transport and logistics costs have also risen in the  
The European Commission survey on the opportunity to make major wake of the Covid-19 pandemic. Looking at December’s manufacturing  
purchases also shows that Polish households have higher spending PMI, the record-high level of the input price component also illustrates  
intentions than consumers do in most of the other EU countries.  
the strong cost pressures. This has been partially offset by relatively  
low oil prices since March.  
The bank  
for a changing  
world  
st  
Eco Emerging // 1 quarter 2021  
economic-research.bnpparibas.com  
2
0
THE POLICY MIX WILL REMAIN ACCOMMODATIVE, WHICH  
IS SUSTAINABLE  
1
0-YEAR GOVERNMENT BOND RATE (%)  
7
6
5
4
3
2
1
0
Poland entered the Covid-19 crisis with moderate public debt (46%  
of GDP in 2019). This should enable it to maintain economic support  
efforts in the short term, albeit smaller than those implemented last  
spring. The main difference is that the second wave of Covid 19 has had  
a smaller impact on activity in fall 2020 than in the spring (factories  
were allowed to remain open). The first economic stimulus plan was  
comprised of strictly fiscal measures equivalent to 4.5 points of GDP as  
well as a cumulative total of nearly 7 points of GDP of subsidised and/  
or state-guaranteed loans granted by the Polish Development Fund  
and by the state-owned bank BGK. All these factors drove up public  
debt to 58% of GDP in 2020.  
Additional measures were rolled out in December for about 1.5% of  
GDP, but they were limited to the sectors hardest hit by the lockdown,  
such as the transport sector. These measures included the exemption  
of charges, subsidised loans and compensation for low activity (partial  
unemployment, assistance for households that have lost their jobs).  
0
7
08  
09  
10  
11  
12  
13  
14  
15  
16  
17  
18  
19  
20  
21  
SOURCE: REFINITIV  
CHART 2  
Thanks to the smaller cost for public finances and positive nominal but it is limited to corporate loans.and should not exceed 3 months  
GDP growth, the increase in public debt should decelerate, to 60% of for companies that already benefited from the first moratorium, and 6  
GDP in 2021.  
months for the others.  
As part of the European Recovery Plan, nearly EUR 19 bn (in subsidies) By category, the share of late loan payments has not changed (5.7%  
will be disbursed in 2021-2022 based on the assumptions published of loan payments were late by more than 30 days), despite greater  
by the European Commission. The so-called “rule of law” clause is not difficulties in the sectors’ hardest hit by the pandemic. The increase in  
applicable as long as the European Court of Justice (ECJ) has not ruled credit risk can be seen in the greater proportion of loans under close  
on the appeal filed by Hungary and Poland. Given the Court’s usual monitoring (which rose from 8% to 13% of corporate loans). These  
delays in handling cases, this ruling is unlikely to disrupt the first dis- loans require provisions, which automatically affects bank profitability.  
bursements.  
The Return on Assets (ROA) diminished from 0.7% at year-end 2019  
to 0.45% at the end of H1 2020. The restructuring of household loans  
previously granted in Swiss francs (CHF) also contributed to the de-  
cline in profitability: the ECJ ruled in favour of their cancellation, which  
meant that banks had to set aside provisions equivalent to 15% of their  
annual profit.  
Thecentralbank(NBP)isnotplanninganewpublicsecuritiespurchasing  
programme. Under the first programme, it purchased the equivalent of  
4
.7% of GDP (i.e. more than 15% of the central bank’s assets), which  
helped bring down 10-year rates from more than 2% before the Covid  
crisis to 1.25% in early 2021. Over the same period, the central bank  
has not changed its key rates since the rate cuts of spring 2020 (which Against this background, the banks continue to be well capitalised  
brought the key policy rate to 0.1%). Even so, an accommodating bias (CET1 ratio of 16.9%) and should be capable of facing up to the risk of  
remains in place with an implicit target of maintaining the zloty at an increase in the non-performing loan ratio, which for the moment is  
relatively low level (PLN 4.6 for EUR 1 currently), even though the size holding at 3.8%.  
of the current account surplus would justify a stronger currency.  
Completed on 11 January 2021  
CREDIT RISK IS STILL MILD, BUT SHOULD RISE IN A MANA-  
Stéphane COLLIAC  
stephane.colliac@bnpparibas.com  
GEABLE WAY  
The growth of bank lending to the non-financial private sector has  
dropped off sharply since the beginning of the Covid-19 pandemic.  
Loans outstanding amount to 50.7% of GDP. The increase in lending  
to the private sector (nearly 7 points of GDP) came from state-owned  
financial institutions (Polish Development Fund, BGK) and thus did not  
increase the exposure of the banking sector.  
The first 6-month moratorium on the repayment of bank loans was  
initiated in March 2020 and ended in September. At the end of the first  
half of 2020, 12.3% of corporate loans and 8.4% of household loans were  
eligible according to NBP, although the banks determined eligibility on  
a case-by-case basis. The share of the loans eligible declined sharply  
thereafter, notably for households, as unemployment fears vanished  
rapidly. A new moratorium was introduced in mid-December 2020,  
The bank  
for a changing  
world  
QUI SOMMES-NOUS ? Trois équipes d'économistes (économies OCDE, économies émergentes et risque pays, économie bancaire) forment la Direction des Etudes Economiques de BNP Paribas.
Ce site présente leurs analyses.
Le site contient 2682 articles et 705 vidéos