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Financial Crisis in Poland and Latvia
Evaluated!
| Nr. | Chapter | Page. |
| INTRODUCTION | 3 | |
| 1. | FINANCIAL CRISIS IN POLAND | 4 |
| 1.1. | ECONOMIC PERFORMANCE OF POLAND | 4 |
| 1.2. | FINANCIAL SECTOR | 5 |
| 1.3. | FIGHTING AGAINST CRISIS | 6 |
| 2. | FINANCIAL CRISIS IN LATVIA | 8 |
| 2.1. | ECONOMIC PERFORMANCE OF LATVIA | 8 |
| 2.2. | MACROECONOMIC OVERVIEW | 9 |
| 2.3. | CREDIT GROWTH AND PROPERTY BUBBLE | 10 |
| 2.4. | FIGHTING AGAINST CRISIS | 12 |
| CONCLUSION | 14 | |
| TABLE OF REFERENCES | 15 | |
| ADDITION | 18 |
1.FINANCIAL CRISIS IN POLAND
1.1. ECONOMIC PERFORMANCE OF POLAND
Poland is one of the fastest developing countries in European Union. The country’s macroeconomic performance has been very strong in recent years:
growth has averaged about 5,35 % from 2005 to 2008 [ see table 1];
shrinking unemployment rate, which approached level of 9,5 % in the end of year 2008 [see table 2];
Poland managed to keep its current account deficit relatively low- end of 2008 was 3,4 %[ see table 3];
debt also remained stable at about 40–50 percent of GDP, in the end of 2008- 45,5 % [see table 3].
Financial crisis has its output on each European economy. Poland, however, is considered as having its economy in really good shape comparing to other central and eastern European countries. Poland is facing economic crisis mainly because of economic slowdown of foreign economies, including euro area countries, which are Poland’s major trade partners. Polish manufacturers sell about 80 percent of their products to the European Union, with a quarter of total exports sent to Germany. According to Central Statistical Office1 in the end of 2008, we could observe following trends in Polish economy:
decrease in export by 7,5 % and in import by 4,4%;
industrial output fell down by 9%, this serious drop had its output on construction companies, that disclosed positive results;
labour market:
increase in unemployment rate, which has been in gradual decline as from early 2008;
the biggest employment reduction took place in manufacturing (down by 17.000 versus 12.000 in industry);
lower demand in employment has its output in drop in wages and salaries which went down to 7,4 % in manufacturing.…
The global financial crisis, which almost each country is facing right now, began in July 2007, in the USA. However, in Europe financial crisis intensified in Autumn 2008. It resulted in dislocation of money, interbank and credit markets due to collapse of confidence among market participants, related largely to uncertainty about the final size and location of credit losses.Each country weathers crisis in different way, but the overall situation in financial markets remains far from normal. The aim of this paper is to present condition of Polish and Latvian economy. Show the extend of economic crisis in both countries and the way how are these countries dealing with global recession. The first part is introducing problem of financial crisis in Poland. In the beginnig, it points out macroeconomic performance of Poland in the last few years, as well as the effects of present slowdown in economy. Next issue is Polish financial sector as a sector , which is affected the most by crisis. In the end,it presents steps which were taken by Polish government to fight against negative outputs of crisis. The second part presents current and previous economical situation in Latvia, pointing out the reasons why did successful economy of Latvia overheat and what should be done next. It starts with macroeconomic overview of Latvia, together with explanation of all changes in ratios and indexes. However, the main part of paper about Latvia is concentrating on credit expansion and property bubble caused by it, which were the main reasons of overheated economics. In the end, there are given certain actions,which are aimed in order to fight with crisis. All data and facts presented in paper are written on the basis of collected articles, reports and surveys.
