1. Witold M.Orłowski Chief Economic Advisor, PwC Polska June 28, 2017
CEE in a Global Context: macro economy, politics, outlook for real estate
Witold M.Orłowski Chief Economic Advisor, PwC Polska
June 28, 2017

2. A strange history… GDP per capita (PPP), Germany equals 100 120,0
100,0
80,0
60,0
40,0
20,0
0,0
1950
1990
2015
Germany
Czech Republic
Slovakia
Hungary
Poland
Source: IMF

3. GDP per capita in Europe, 1990*
GDP per capita in Europe, 1990
GDP p.c. at PPS
as % of Europe’s average
Above 140% %
60-100%
Below 60%
Source: IMF

4. GDP per capita in Europe, 2015*
GDP per capita in Europe, 2015
GDP p.c. at PPS
as % of Europe’s average
Above 140% %
60-100%
Below 60%
Source: IMF

5. The prospects for CEE economies dependent on situation in Germany/eurozone (example: Poland)
Dynamics of the Polish and German exports 2010–2016

6. The prospects for CEE economies dependent on situation in Germany/eurozone (example: Poland)
GDP growth rate
7,0
5,0
3,0
Poland
Eurozone
1,0
-1,0
-3,0
-5,0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

7. Common features… GDP growth in CEE countries Source: IMF 12,0 8,0
Eurozone
4,0
Poland
Czech Republic
0,0
Slovak Republic
- 4,0
Hungary
Slovenia
Baltics
- 8,0
- 12,0
- 16,0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: IMF

8. What makes a difference? The indebtedness
Public debt as % of GDP
Poland
and majority of CEE
are much less
indebted
Over 120% %
80-100%
100
60-80%
60% EU threshold
40-60%
Below 40%

9. What makes a difference? The competitiveness
Average wage as % of the EU
Poland
and majority of CEE
are much more
competitive
Over 120% %
80-100%
60-80%
40-60%
Below 40%

10. } } Growth model in 2004-2008 FDI inflows Exports increase
Stable growth
of consumption
Improving public finance
Growing disequilibrium: C/A, inflation
shifting production within the Union }
fall of unempl., wage growth, credit expansion

11. } } Growth model in 2009-2016 Reduced FDI inflows
Slower exports increase
Weaker growth
of consumption,
investment
Changes in public finance
Reduced disequilibrium: C/A, inflation
shifting production within the Union }
lower wage growth, slower credit expansion

12. Differences…

13. Differences… Fiscal Balance as % of GDP 2016 2017 2018 Source: IMF
Germany
Lithuania
Latvia
Estonia
2016
Slovenia
2017
2018
Slovak Republic
Maastricht Treaty 3% limit
Poland
Hungary
Czech Republic
- 4,0
- 3,0
- 2,0
- 1,0
0,0
1,0
Source: IMF

14. Differences…

15. Future growth: some question marks
Growth model
Financial stability
Internal politics
EU relations
Prospects for the real estate market