Of the central European emerging markets, the Lex column at the Financial Times believes that Poland is best placed to weather the western slowdown. Poland represents a bigger domestic market, and larger share of exports going to still fast-growing Russia and Ukraine. Furthermore, only about 20% of its GDP comes from exports to the eurozone, against about 40% for the Czech Republic, Hungary and Slovakia.
The governing coalition, while far from perfect, looks relatively stable in a region known for political turmoil.
Economic growth is slowing from 6.6% last year, to a forecast 5.3% this year. Industrial output growth is also off sharply and a tighter monetary policy is being used as a tool to rein in inflation which is just under 5%, nearly double the 2.5% target. The current account deficit is also moving up but is in better shape than neighbor countries.
But Capital Economics forecasts a bounceback towards 5% annual GDP growth by 2011-2012 boosted by higher labor productivity. Poland's market has not been spared from the emerging market sell-off. The Warsaw market is down a third from its all-time peak last October. Trading at 9.5 times forward earnings, compared with a five-year average of 16 times.