1. 1 Performance of the Polish economy in the days of global economic turbulence „ Mapping the previous 20 years and the next 20 years ” Jan Krzysztof Bielecki, Chairman of the Economic Council to the Polish PM Donald Tusk Tel Aviv, December, 2010

2. 2 Map of the presentation „All about maps”: -Map of European growth in crisis year of 2009 -Panoramic map (20 years) of how we got there -Map of the CEE – why you should think countries, not „the region” -Map of what remains to be done -How The Economist sees the changes on the map of Europe in the next 5 years

3. Polish economy is growing even during the time of crisis – in very tough 2009… Real GDP growth rate in Europe 2009 (y-o-y change) EU: - 4,2 Euro area: - 4,1 Source: European Commission FRA - 2,2 ESP - 3,6 PRT -2,7 IRL - 7,1 GBR - 4,9 BEL - 3,1 NLD - 4,0 DEU - 5,0 LUX - 3,4 CHE - 1,5 ITA - 5,0 NOR - 1,5 SWE - 4,9 DNK - 4,9 FIN - 7,8 EST - 14,1 LVA - 18,0 LTU - 15,0 POL 1,7 CZE - 4,2 SVK -4,7 AUT - 3,6 SVN - 7,8 HUN - 6,3 ROU - 7,1 BGR - 5,0 GRC - 2,0 CYP - 1,7 5

4. 4 PANORAMIC MAP OF HOW WE GOT THERE

5. 5 Poland was the first transition country to exceed its 1989 GDP level Source: EBRD, Pekao Research

6. 6 Following two years of painful reforms, back on the growth track Source: EBRD Transition Report 2008

7. 7 Key transition indicators suggest Poland scores very close to „best pupils in its class” Source: EBRD Transition Report 2008 * Latvia,Estonia and Croatia were considered more advanced in banking reform... *

8. 8 Dynamic increase of foreign trade is one of the key drivers of investments and growth Source: Statistical Office, Pekao Research

9. 9 MAP OF THE CEE – WHY YOU SHOULD THINK BY COUNTRIES AND NOT BY „THE REGION”

10. 10 The crisis was an „acid test” for the growth model of CEE countries…

11. 11 These countries that expanded their budgets too much (often with credit booms) - suffered

12. 12 Poland is less dependent from external conditions than other countries in the region Source: World Bank

13. 13 Polish banking sector lent mostly in local currency – smaller FX risk Source: World Bank

14. 14 Polish banking sector has almost balanced loan-to-deposit ratio – less risky than others Source: World Bank

15. 15 MAP OF WHAT REMAINS TO BE DONE

16. 16 Key challenges for the government - deficits General government fiscal balance, % of GDP Source: World Bank

17. 17 Key challenges for the government - debt General government public debt, % of GDP Source: World Bank

18. 18 However, indebtedness remains one of the lower ones compared to other EU countries… Source: World Bank

19. 19 Lower outstanding public debt…… Source: for 2009 official data from Eurostat, and for 2010 estimates from official fiscal notifications of the countries

20. 20 ……is reflected in lower credit risk Note: CDS rates reflect cost of protection against default of debt issuer

21. 21 Note: for every country yields (in %) and spreads to Bunds (in bps) for bonds denominated in euro …..and cost of debt servicing

22. 22 Key challenges for the government - summary Ambitious privatization plans –almost 740 enterprises in the next two-three years Extensive infrastructure building plans (motorways, energy sector), to be boosted with EU funds. Almost 1100km of motorways under construction Challenge of maintaining fiscal discipline amid economic slowdown, ambitious infrastructure construction plans and the challenge of structural changes in economy and society

23. 23 Key challenges according to the European Commission latest report - curbing structural deficit - continuing catching-up process - securing steady competitiveness gains via continuous upgrade of the export structure - maintaining macroeconomic stability Source: European Commision, „Poland – leading the pack in the recovery phase”, May 2010

24. 24 MAP OF EUROPE IN 2015 ?

25. 25 Source: „The Economist”, May 2010 Europe in 2015… by „The Economist”

26. 26 Thank you for your attention …

27. 27 Enclousers

28. 28 Relatively strong performance of Polish stock market

29. 29 Poland attracts foreign capital