Polish economy is highly graded by investors. However, rising CHF exchange rate makes anxiety, which can influence on lower spending households that are in debt.
August was one of the worst months in recent decades. Falls on global markets has reached 10-20%. There are few causes for such smash down, but main is that markets “believe” that in 2012 we can expect serious recession in developed countries.
A “million dollar question” concerns how long this slow-down will last and how deep it will be. With growing globalization of capital flows, asset managers have many opportunities to choose countries and regions where they can invest. From this perspective polish market compete with GEM (Global Emerging Markets), or more specific- with EMEA region. After risk-profit assessment potential investors must decide if they want to invest in Brazil, Turkey, Russia, Poland or South Africa.
Polish trumps
Firstly, Poland is a large country in Central Europe, with young population, which is more and more educated and productive. Accessing the EU in 2004 cause quite strong internal demand, which added to positive exportation surplus, has been main factor that burst the economy in 2009.
Another strong attitude is fact that Poland itself is relatively low in debt. Public debt is kept on healthy level, because constitutional debt limit has been effective toward politicians. Last but not least, banking sector is “healthy” it offers simple and traditional products and banks lend money from local deposits.
Another important matter for those who make decisions on investment is a risk connected with policy and legal regulations. In this aspect Poland is really good condition in comparison to other GEM competitors, because its EU membership creates better legal environment that are hard to find in competing countries. The fact that Poland was a part of European Union, but not yet a member of Euro-zone, was crucial for good economic result in 2009. Thanks to depreciation of PLN to EUR, polish exportation to Euro-zone was very competitive.
Disturbing franc
Of course, not everything is such positive- there are a few black clods on the horizon. Current government leads responsible fiscal policy, and in 2012 we expect next deficit reduction. However, the level of consolidation influence on GDP growth is still not known, and there is a risk that without public spending the economy will much more suffer from crisis than in 2009. Another issue is appreciation of franc. Household are relatively high in debt in foreign currencies, what causes fall in consumption of income. Apart from that, the amount of credits rises in comparison to real estate guarantees. It is still not clear how banks and authorities will cope with this problem, the risk exist but is constantly monitored and assessed by both local and foreign investors.
To sum up foreign investors constantly asses the risk connected with each investment according to possible profits. Poland, as a product competes with several countries from Emerging markets. We can say that Poland is seen as a stable and strong economy, which still can prove a proper growth. Moreover the risk connected with legal regulations and policy is similar to those from GEM. Healthy fiscal situation, low debt factor and currency of changing rate are for sure good sales trumps for polish capital markets as a place for foreign investment.
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