No. 038 / 9th June 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

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MANUFACTURING & PROCESSING

Ciech privatization completed as Kulczyk acquires 51% of shares page 2

Finnish Valmet may relocate production from Germany to Poland page 2

May Manufacturing PMI data weakest since June 2013 page 3

ENERGY & RESOURCES Germany's RWE to invest PLN 1.64bn in Warsaw power grid page 3

PROPERTY & CONSTRUCTION

CBRE looks back at the last 25 years of Poland's office market page 4

SERVICES & BPO

Employment in business services sector to reach 160,000 by end-2015 page 5

RETAIL PROPERTIES

Austria's Immofinanz obtains permit for EUR 50m retail project in Stalowa Wola page 6

TECHNOLOGY

Google to open its Campus start-up hub in Warsaw page 7

IT & TELECOM

Skąpiec.pl, Opineo.pl and Telepolis.pl change owners page 7

POLITICS & ECONOMY

European Commission to lift excessive deficit procedure on Poland page 9

POLAND TRANSFORMED

No pain, no gain page 13 More trust, less red tape page 14 People power page 15 Master of its own destiny page 18 Through the lens of history page 19 Telling Poland's story to the world page 20

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 21-23

Some of the 50 international journalists taking part in Poland Today’s Poland Transformed press tour, which aimed to bring the country’s success over the past 25 years to a wider audience around the world. The journalists started the tour at the Warsaw Stock Exchange, a key symbol of Poland’s economic success. Photo: Poland Today

Poland Transformed: special coveragePoland Transformed: special coveragePoland Transformed: special coveragePoland Transformed: special coverage In this special edition of BR+ we bring you extended coverage of our highly successful Poland Transformed conference, which saw business leaders and opinion formers discuss Poland's key economic achievements and challenges. pages 10-20

Obama: Poland will never stand alone Obama: Poland will never stand alone Obama: Poland will never stand alone Obama: Poland will never stand alone During his high-profile visit to Warsaw last week US President Barack Obama reaffirmed his country's commitment to Poland's security under the NATO alliance and said he would ask the Congress to boost the US military presence in Europe. page 8

weekly newsletter # 038/ 9th June 2014 / page 2

MANUFACTURING & PROCESSING

Ciech privatization Ciech privatization Ciech privatization Ciech privatization completed as Kulczyk completed as Kulczyk completed as Kulczyk completed as Kulczyk acquires 51% of sharesacquires 51% of sharesacquires 51% of sharesacquires 51% of shares

Polish billionaire Jan Kulczyk has successfully ac-quired a 51% stake in the Warsaw-listed chemical pro-ducer Ciech through a buyout bid, at the cost of ap-proximately PLN 0.8bn. The Polish state, which had a 38% stake in the company, has thus exited Ciech, cash-ing in PLN 642m (including a PLN 23m dividend). "We have successfully closed one of the longest privat-izations," deputy Treasury Minister Paweł Tamborski said last week. "Ciech has undergone deep restructur-ing in which the Treasury played an active part. We hope the transaction enables the company to develop to the benefit of its shareholders."

Ciech Group key financial figures

-5

-4

-3

-2

-1

01

2

3

4

5

2006 2007 2008 2009 2010 2011 2012 2013

-500

-400

-300

-200

-100

0100

200

300

400

500

Turnover in PLNbn, lef t axis

Net profit in PLNm , r ight axis

Source: Ciech

Kulczyk had initially sought to acquire 66% of Ciech offering PLN 29.5 per share, but it later lowered the

threshold to 60% and raised the price to PLN 31, which convinced the Treasury as well as some other shareholders. Although Kulczyk's SPV KI Chemistry managed to buy only slightly more than 50% of shares, it decided to finalize the transaction. "We are confident that thanks to Ciech's global expan-sion we will be able to significantly increase the com-pany's value," commented Sebastian Kulczyk, who has recently taken over management of his father's com-pany Kulczyk Investments. Ciech is one of Poland's leading chemical companies with a stock market capitalization of more than PLN 1.7bn. The group includes more than 30 companies that produce, among other, soda ash (Ciech is its num-ber two supplier in Europe), sodium bicarbonate, salt, fertilizers, crop protection chemicals, epoxy, polyester resins and other organic chemical products that are used in glass, furniture, chemical, construction indus-tries and agriculture. Besides several production units in Poland, Ciech owns factories in Romania and Ger-many. In 2013 Ciech turned over PLN 3.5bn (down from PLN 4.4bn in 2012) and posted a small profit (against a net loss of PLN 431m in the prior year). Ciech is currently seeking buyers for a number of attractive assets, in-cluding the site of its former headquarters on War-saw's Powązkowska Street that seems like a perfect spot for a large office project. With some EUR 2.8bn under management, Kulczyk Investments is involved in the mineral resources, en-ergy, infrastructure and real estate sectors. It's largest projects include Autostrada Wielkopolska (the Konin-Świecko section of the A2 highway), Kompania Piwowarska (Kulczyk sold exchange his shares in Poland's top beer maker for a stake in its strategic investor SABMiller) as well as the largest importer of VW group vehicles to Poland.

MANUFACTURING & PROCESSING

Finnish Valmet may Finnish Valmet may Finnish Valmet may Finnish Valmet may relocate production relocate production relocate production relocate production from Germany to from Germany to from Germany to from Germany to PolandPolandPolandPoland

Finnish auto supplier Valmet Automotive plans to downsize 300 jobs in Germany because of dwindling demand for convertible cars, German union IG Metall said last week. The maker of roof systems will cut all production jobs and some white-collar positions at a plant employing 400 people in Osnabrueck, western Germany, IG Metall's regional director Stephan Soldanski said. Valmet will either transfer jobs imme-diately to Poland or gradually phase out the positions through 2017, Soldanski told Reuters, citing a staff briefing by company managers. The units in Germany and Poland manufacture roof systems also for e.g. Re-nault, BMW/MINI and VW/Bentley.

Valmet Automotive produces roofing systems in Germany and Poland. Photo: Valmet Automotive

weekly newsletter # 038/ 9th June 2014 / page 3

Valmet Automotive is a service provider in automotive engineering, vehicle manufacturing, convertible roof systems and related business services. Their focus are-as of expertise are premium cars, convertibles and electric vehicles. In 2010 the company took over the convertible roof business from bankrupt German Wil-helm Karmann GmbH. It employs around 2,000 professionals in Finland, Germany, Poland and China. Valmet Automotive was founded in 1968 as a manifes-tation of Finland's desire to have its own auto industry and has assembled Saab, Opels, Porsches, Talbot-Chryslers, but is probably most known internationally for its production of the Saab convertible. In August last year Valmet Automotive launched the manufac-turing of the Mercedes-Benz A-Class. Valmet belongs to the Finnish engineering group Metso, private equi-ty fund Pontos Group and the Finnish state. Shifting production to Poland, where manufacturing sector wages amounted to an hourly EUR 6.65 per worker in 2012, compared to the EUR 36.98 in Germa-ny, according to the Cologne-based IW economic in-stitute, would enable the Finns to substantially lower production costs. German automotive giant Volkswagen makes the convertible version of its popular Golf mode in Osnabrueck, whereas its GM-owned rival Opel has been making the Cascada drop-top in Gliwice, Poland, since 2013.

POLITICS & ECONOMY

MayMayMayMay PMI data weakePMI data weakePMI data weakePMI data weakest st st st since June 2013since June 2013since June 2013since June 2013

Poland's manufacturing sector purchasing managers' index PMI fell to 50.8 points in May, its 11-month low,

from 52.0 points just one month prior. The data, pro-vided by HSBC and Markit, was lower than average expectations (52.2 pts). According to the report, growth of both output and new orders slowed for the third successive month to weak rates, and new export orders fell for the first time since May 2013.

Purchasing Managers' Index (PMI) The 50 mark separates growth from contraction

45

50

55

60

Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14

Source: Markit & HSBC

New business rose for the twelfth month running, but the rate of expansion slowed further from February's peak to the slowest since June 2013, whereas manu-facturing employment rose for the tenth month run-ning in May, but the rate of job creation slowed to a marginal pace, the report said. Firms also cut purchas-ing activity for the first time in 11 months. "This was the third consecutive decline and it affected all main sub-indices: employment, output and new or-ders. We have been suggesting for a couple of months already that the PMI was too high as compared with pace of economic recovery. However, now the indica-tor approached the 50pts mark, a border between ex-pansion and contraction, and this is worrying," com-mented bank BZ WBK bank analysts. "The current level of the gauge is still more or less in line with expansion of industrial output by ca. 5%y/y,

but a continuation of downward trend can suggest that the recovery is waning. In our view next few months will be crucial, as they will show if we are dealing with a downward trend in activity or only with a temporary deterioration of mood, due to worries about conflict between Russia and Ukraine. We view the latter effect as temporary, as data show that decline of orders from Russia and Ukraine is more than offset by rising de-mand from the euro zone," they concluded.

ENERGY & RESOURCES

Germany's RWE to Germany's RWE to Germany's RWE to Germany's RWE to invest PLN 1.64bn in invest PLN 1.64bn in invest PLN 1.64bn in invest PLN 1.64bn in Warsaw power gridWarsaw power gridWarsaw power gridWarsaw power grid

German power distributor RWE Stoen Operator will make grid investments in the Warsaw area to the tune of PLN 1.64bn over the coming half a decade, the company announced. The investor is expecting a con-siderable growth in power consumption as the city and its vicinity keep developing and the planned invest-ments are to ensure security and continuity of sup-plies. Over the past ten years the German investor spent PLN 1.9bn on grid improvements in Warsaw. "The investments planned for the years 2014-2019 will not only stimulate the development of the War-saw agglomeration, but will also serve as an oppor-tunity to transform Warsaw into the city of the future," comments Robert Stelmaszczyk, President of the Board of RWE Stoen Operator. "Implementation of the Smart Grid concept in the area of our operation will essentially improve the level of energy efficiency of the system. It will also allow for the development of dis-persed generation which is to play a major role on the future energy market”

weekly newsletter # 038/ 9th June 2014 / page 4

Under its development plan for the 2014-2019 period, which has been approved by the energy regulator URE, RWE Stoen Operator is to install over 165 km of high-voltage, 512 km of medium-voltage, and 1,332 km low-voltage lines in the Warsaw area. Additionally, the company will build and/or modernize 24 high-voltage power substations and 843 medium-voltage/low-voltage power substations. This year alone, RWE is to spend PLN 235m on grid-related investments that will include the construction high-voltage power substations: Cybernetyki (PLN 17m), Towarowa (PLKN 50m), Tarchomin (PLN 17m) and high-voltage power lines: Mościska (PLN 52m) as well as Siekierki-Stegny-Południowa (PLN 20m). The new substations are located in the fastest growing are-as of the city: the business hubs of Mokotów and Wola (Cybernetyki and Towarowa) as well as the residential suburb of Tarchomin. Those new projects will not on-ly improve the security of power supply in Warsaw, responding to the growing demand for electricity, but also improve the quality of supply for existing custom-ers, RWE said. According to estimates cited by RWE, by 2030 the population of Warsaw is likely to hit the 3m mark. RWE's new investment program is part of the compa-ny's efforts aimed at transforming the Warsaw power system towards modern solutions. As a result, tradi-tional one-way grids will be gradually replaced by Smart Grids which, owing to two-way communication, support the sustainable consumption of energy and the development of dispersed generation. The intro-duction of smart grids and remote metering is intend-ed to help achieve the EU goal of 20% growth in ener-gy efficiency. RWE is to implement its first PLN 65m smart metering project in Warsaw in the years 2014-15 by installing modern meters that enable remote data reading at selected locations.

The largest energy producer in Germany and number three in the UK, RWE employs 66,000 staff and sup-plies electricity to more than 17m customers and gas to some seven million households. Its Polish operations include the main unit RWE Polska (which supports the group's development in the country and sells ener-gy to some 0.9m clients primarily in the Warsaw area), Warsaw power grid company RWE Stoen Operator, as well as wind farms with a combined capacity of 197MW.

PROPERTY & CONSTRUCTION

CBRE looks back at the CBRE looks back at the CBRE looks back at the CBRE looks back at the last 25 years of last 25 years of last 25 years of last 25 years of Poland's office marketPoland's office marketPoland's office marketPoland's office market

Amid last week's celebrations surrounding the 25th anniversary of the 1989 elections, also Poland's real es-tate sector indulged in some reminiscences, with the consultancy CBRE publishing a report on the past 25 years of the country's office sector. Looking back, one finds it hard to believe that the first modern office buildings began appearing in Warsaw only as recently as the early 1990s. According to CBRE data, through-out the past quarter of a century a total of 951 office buildings with a combined area of 7m sq.m have been built in Poland, roughly a half of which in Warsaw. "Over the past 25 years, 430 modern office buildings with a total area of 4.2sq.m were constructed in War-saw. Previously existing office buildings such as Universa, which was built in mid 1960s, or Intraco, which was delivered ten years later, offered a relative-ly low standard. Buildings developed throughout all these years in Warsaw brought various standards and functions," – said Joanna Mroczek, Director of Re-search and Consultancy at CBRE.

The first decade following the end of Communism (be-fore 2000) saw the completion of, among others, the initial phases of the Atrium and Empark complexes as well as the first high-rises such as Orco Tower, Ilmet or Warsaw Financial Center. Apart from office build-ings situated in the centre of Warsaw, there were also Poland's first business parks, for instance Wiśniowy Business Park, Jerozolimskie Business Park, Ochota Office Park or University Business Center.

New office space in Warsaw in sq.m

050,000100,000150,000200,000250,000300,000350,000400,000450,000

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

200

2001

2002

2003

200

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: CBRE

In the years 1990-2000, 153 buildings with a total area of 1.44m sq.m were constructed in Warsaw, of which more than 0.4m sq.m in the year 2000 alone, which to this day remains an unrivaled record. In the early 90s, the highest recorded rents reached USD 50 per a sq.m a month, while the vacancy rate remained below 2%. Over the subsequent decade, which witnessed both the investment boom related to Poland's EU accession as well as the fallout of the global financial crisis, a fur-ther 208 office buildings with a total area of nearly 2m sq.m were delivered. The Warsaw real estate market has changed signifi-cantly within the past two decades. In the early 90s, the supply of new office space covered the take-up and the vacancy rate did not exceed 3%. Most office assets were able to find tenants even before commissioning

weekly newsletter # 038/ 9th June 2014 / page 5

or soon after completion. Since 1998, a rapid growth of modern office space supply coupled with limited demand, have pushed the vacancy rate up. According to CBRE, the most difficult periods for developers and landlords were the crisis years of 1999-2001 and 2009-2011.

Modern office stock in key cities No. of assets Total area in sq.m

Warsaw 430 4,200,000

Kraków 102 628,000

Wrocław 100 551,000

Tri-City 80 455,000

Katowice 51 317,000

Poznań 55 303,000

Łódź 58 297,000

Source: CBRE

Over the next three years, CBRE analysts expect an es-timate 0.6m sq.m of modern office space to be deliv-ered in the Warsaw area, including 350,000 sq.m in the city centre, mainly along the new subway line, the central part of which is to reach completion later this year.

Warsaw's skyline is far from complete: a number of high rises are currently under construction and many more are still at a planning stage. Photo: CBRE

"The demand for office space is shaped mostly by for-eign businesses which are looking to expand their

premises, consolidate branches, diversify activities re-gion-wise and enter the Polish market in search for highly skilled employees. Polish businesses, banks or insurance companies in particular, usually decide to build their own seats or lease space in co-owned build-ings," says Łukasz Kałędkiewicz, Senior Director at CBRE Office Agency.

25 YEARS OF THE POLISH OFFICE MARKET IN NUMBERS • highest office building (Warsaw Trade Tower – 208

m with the pinnacle)

• largest office building – Rondo 1 – 57,000 sq.m GLA

• largest office complex – Empark – 107,000 sq.m GLA

• highest rent – USD 50-60 - early 90s – Centrum LIM

• highest vacancy rate – 25% in Lodz (2009)

• most expensive office building (investment sales) –

Rondo 1 sold for EUR 297m (2014)

• largest floor space in an office building –

Konstruktorska Business Centre in Warsaw – 7,341

sq.m.

• largest amount of office space delivered in a single

year in one city – 427,000 sq m in Warsaw (2000)

• largest amount of office space leased in a single year

in one city – 107,000 sq m in Krakow (2012)

• biggest lease agreement – 43,700 sq.m. Orange in

Miasteczko Orange in Warsaw (43,700 sq.m.

Source:CBRE

Foreign investors, mainly business process outsourc-ing companies, are also the main driver of office de-velopment in regional cities, mainly Kraków, Wrocłąw, Poznań, Katowice, Tri-City and Łódź. The first modern office building outside Warsaw was Szczecin's PAZIM, completed in 1992. Currently, there are over 1.2m sq.m of office space under con-struction throughout Poland, which, when completed, will boost the office stock in the largest Polish cities by over 17%.

SERVICES & BPO

Employment in Employment in Employment in Employment in bbbbusiness usiness usiness usiness services sector to services sector to services sector to services sector to hithithithit 160,000 160,000 160,000 160,000 by endby endby endby end----2015201520152015

Over the past 2½ years Poland's modern business ser-vices sector has grown by a half and currently employs close to 130,000 people in foreign-owned centers alone, shows a brand new report by the industry's or-ganization ABSL. Including domestic centers and out-sourcing firms, the sector boasts more than 200,000 employees. Since the beginning of 2013 Polish cities welcomed 66 new business services centers, most of which were opened by new investors that included the likes of ThyssenKrupp, Merck, GE Healthcare, RWE, Mars, DFDS, Linklaters and McCormick. "Before the end of 2004 there were 96 foreign-owned business services centers. Today there are 470 – nearly five times more. They employ 128,000 staff – mainly university graduates, as well as professionals and managers with a few years of experience," says Marek Grodziński, deputy chair of ABSL and manager of Capgemini's European BPO center network. ABSL points out that the sector already employs more people than the coalmining industry, and according to projections it will create a further 30,000 jobs by the end of next year. According to a 2014 report by Gartner Poland is the number one destination for business services projects in the EMEA region. Another global consultancy Ev-erest has listed the country as the most mature loca-

weekly newsletter # 038/ 9th June 2014 / page 6

tion in Europe for foreign direct investment in the business services sector. "Business services centers are already the leading cat-egory among foreign investments, both in terms of project numbers as well as job creation. There are 325 foreign business services center operators from 28 countries in Poland, mainly from the US, France, UK, and Germany," says Przemysław Berendt, Global VP Marketing at Luxoft and deputy chair of ABSL. An average center employs 273 staff and that number continues to increase every year, as it's the existing centers, not newcomers, that are the main job creators. According to the ABSL report there are 28 centers in Poland with more than 1,000 employees.

Employment at BPO/SSC centers in Poland

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

2008

2009

2010

2011

2012

*2013

*2014

**2015

Source: ABSL *) as of April **) projected year-end

Although investors continue to choose mainly Poland's largest cities: Kraków, Wrocław, Warsaw, Tri-City, Łódź and Poznań, recently one has seen growing in-terest in smaller towns, for instance Bydgoszcz, Ra-dom, Lublin or Szczecin. Poland is the only CEE coun-try that offers as many as 11 cities of more than

300,000 residents with a substantial supply of talents and offices. As far as the centers' key focus is concerned, 29% of their employees manage IT processes and a further 22% provide financial and bookkeeping services. Most centers cover a number of different processes and a vast majority have been expanding their competences and will continue doing so in the future. When it comes to their geographic coverage, the Poland-based centers serve mainly customers in Western Europe (90% of centers), Poland (63%) and the CEE region (60%) in as many as 40 different languages. "Modern business services, especially of the more ad-vanced kind, such as services for international invest-ment funds, are likely to become one of Poland's most important and recognizable exports in the coming three-five years. In a relatively short Poland may be-come a European hub, providing strategic services for global clients," says Jacek Levernes, Chairman of ABSL and member of the board at HP Europe.

RETAIL PROPERTIES

Austria's Immofinanz Austria's Immofinanz Austria's Immofinanz Austria's Immofinanz obtains permit for obtains permit for obtains permit for obtains permit for EUR 50m retail project EUR 50m retail project EUR 50m retail project EUR 50m retail project in Stalowa Wolain Stalowa Wolain Stalowa Wolain Stalowa Wola

Austrian property giant Immofinanz and its partner Acteeum Group have received a building permit for a retail project in Stalowa Wola,60 km north of Rzeszów, with a GLA of approx. 32,500 sq.m. The in-vestment is expected to total EUR 50m, with construc-tion set to start during 2H 2014, and completion being scheduled for Q3 2015, the company said. The scheme

will be Immofinanz's first center in Poland developed under the company's newest Vivo! concept. With 64,000 residents, Stalowa Wola is a major rail-way junction in the region directly connected to Przemyśl, Kraków, Lublin, Warszawa, Łódź, Wrocław and Silesia. The industrial town is part of the Euro-Park Wisłosan Special Economic Zone. According to the investors, an estimated 400,000 people live within a radius of 30-40 minutes driving time from the cen-ter, including in the towns of Tarnobrzeg (population: 50,000) and Sandomierz (25,000).

The investors behind Vivo! in Stalowa Wola will seek to obtain a BREEAM certificate for the project. Image: Acteeum/Immofinanz

Acteeum Group has a 14% stake in the project with Immofinanz Group holding the remaining 86%. The Jersey-based Acteeum Group was founded in 2006 by Dane Henrik Stig Moeller, who remains the company’s managing director. From May 1998-2006 Moeller was Head of International Business Development and board member at Danish TK Development A/S where he was responsible for the company’s Central and Eastern European activities. During this period TK developed 18 shopping centers in these markets. Besides Stalowa Wola, Acteeum is currently involved

weekly newsletter # 038/ 9th June 2014 / page 7

in two Polish projects: Ogrody shopping centre in Elbląg (currently being expanded from 17,500 sq.m to 40,000 sq.m of GLA) and Galeria Solna in Inowrocław (opened in May 2013 with 31,000 sq.m of GLA). As for Immofinanz, it is focusing on the construction of its flagship retail development in Poland – Tarasy Zamkowe in Lublin. Scheduled to open in Q4 2014, the EUR 95m shopping and entertainment project will comprise up to 38,000 sq.m of rentable space divided into ca. 150 retail units. The Vienna-listed company, which carried out a secondary listing in Warsaw last year, has recently completed one of the largest ever deals on Poland's property market with the EUR 412m sale of Silesia City Center retail property in Katowice to an international consortium of investors led by Alli-anz. Silesia City Center has about 340 stores with combined floor space of 89,000 sq.m, all of which is occupied. Immofinanz's recent completions include a STOP.SHOP. retail park in Mława with a similar prop-erty in Kętrzyn to be opened in 2H 2014. Overall, the developer seeks to build ten STOP.SHOP. projects in Poland over the coming years. Besides shopping cen-ters, Immofinanz Group's ongoing investments in Po-land include the Nimbus office building (19,000 sq.m of GLA) in Warsaw, and residential projects Riverpark in Poznań (189 apartments) and Dębowe Tarasy in Ka-towice (phase three with 317 apartments). Since its founding in 1990, Immofinanz has compiled a portfolio with a carrying amount of approx. EUR 7.4bn. The company concentrates on development management and sale of commercial properties in top locations. Immofinanz Group focuses on retail, office, and logistics projects in Central Europe and Russia.

TECHNOLOGY

Google to open its Google to open its Google to open its Google to open its Campus startCampus startCampus startCampus start----up hub up hub up hub up hub in Warsawin Warsawin Warsawin Warsaw

Poland's tech community was buzzing with excite-ment after finding out that the entourage of US Presi-dent Barack Obama, who came to Warsaw last week (see page 8), would include Google boss Eric Schmidt. His visit did not disappoint, as Schmidt an-nounced that Google for Entrepreneurs was bringing its Campus concept to Warsaw. Campuses are Goog-le's spaces for entrepreneurs to connect, learn and get mentorship, and build innovative startups. According to the announcement, posted by the Head of Google for Entrepreneurs Europe, Eze Vidra, the move to Po-land is part of their "ongoing investment throughout the region."

Google for Entrepreneurs is adding a Warsaw Cam-pus to its two existing EMEA region start-up hubs in London (pictured above) and Tel Aviv. Photo: Bayerberg of Flickr

Eric Schmidt met with Polish Prime Minister Donald Tusk for last week's inauguration. "Google started as a startup in garage, so supporting startups is part of our DNA," Eric said. "Our hope is that Campus Warsaw will supercharge tech entrepreneurs, strengthen the startup ecosystem and encourage even more innova-tion in Poland." In the past couple of years, Poland's entrepreneurial scene has grown and attracted both domestic and in-ternational startups and investors. Warsaw's relatively low cost of living, quality of talent, and proximity to Europe's largest tech city, Berlin, are major selling points. In the EMEA region, Google for Entrepreneurs currently operate Campuses in London and Tel Aviv. The Google unit has over 60 programs in 110 coun-tries. This is not the company's first initiative in Poland. In Krakow, they previously launched the Google for En-trepreneurs Krakow program. They also launched the Digital Economy Lab with Warsaw University. Along with the Visegrad Fund, ResPublica and the Financial Times, Google started New Europe Challengers cam-paign to identify the next generation of innovators.

IT & TELECOM

Skąpiec.pl, Opineo.pl Skąpiec.pl, Opineo.pl Skąpiec.pl, Opineo.pl Skąpiec.pl, Opineo.pl and Telepolis.pl and Telepolis.pl and Telepolis.pl and Telepolis.pl change ownerschange ownerschange ownerschange owners

The past few weeks have seen some ownership reshuf-fles between popular Polish comparison websites, sig-naling further consolidation moves in the country's online media sector.

weekly newsletter # 038/ 9th June 2014 / page 8

Firstly, Onet.pl, the Polish online business of Germa-ny's Ringier Axel Springer Media, agreed to acquire 80% of the shares in retail price comparison website Skapiec.pl and product review site Opineo.pl. Skapiec.pl was set up in 2004 and in March 2014, some 2.1m people visited the portal. The product com-parison site Opineo.pl was established in 2006 and it provides more than 3.8m customer rates and infor-mation about more than 32,000 e-shops. In all, 550,000 people used the portal in March 2014. Onet, which reaches 70% of all internet users in Po-land said the acquisitions will enable it to diversify its portfolio. Skapiec founder Mariusz Janiszewski and Opineo founder Pawel Kucharzak will continue to manage their companies and will each own a 20% stake. Ringier Axel Springer acquired Onet in June 2012 from the ITI Group or a reported PLN 1.275bn (RAS paid PLN 960m for a 70% stake in the busi-ness).Until recently, Onet had been Poland's number one internet portal, but the company is currently com-peting for the top spot with Grupa Wirtualna Polska, controlled by private equity fund Innova Capital. Another deal saw Comperia.pl, the Polish financial and insurance comparison website, acquire the portal Telepolis.pl, which specializes in telecommunica-tions and mobile telephony. According to Media2.pl the transaction amounted to PLN 2.55m. The transac-tion reflects the trend of convergence of financial ser-vices and mobile telephony, said Bartosz Michalek, CEO of Comperia.pl. On 30 May, the companies signed a preliminary agreement, and the final contract will be signed on 30 June. The merger will significantly boost the Comperia user base.

POLITICS & ECONOMY

Obama hails Obama hails Obama hails Obama hails ‘unbreakable’ Poland‘unbreakable’ Poland‘unbreakable’ Poland‘unbreakable’ Poland----US allianceUS allianceUS allianceUS alliance

A rousing speech in Warsaw has helped reassure Poles that the US is serious about its security guarantees There is hope for new vigour in the Polish-American alliance after US President Barack Obama delivered a stirring speech in Warsaw on June 4. The remarks came as part of official celebrations surrounding the 25th anniversary of the end of communist rule and had plenty of red-meat for the Polish audience. President Obama mentioned his home town of Chica-go ("In Chicago, we think of ourselves as a little piece of Poland") and referenced John Paul II (he empha-sized the word "saint"). There was also the expected comparison of Ukraine's struggle with Poland's ("The Ukrainians of today are the heirs of Solidarity"). But Obama also made sure Poles felt appreciated: he said "thank you" a full 10 times during the speech, and once in Polish. Most importantly – for Poles at least – Obama took great care to emphasize the United States’ commit-ment to help defend Poland’s territorial integrity. Po-land depends on the US for security, and the Ukrainian crisis has Poles looking warily across their eastern border. With Poland’s history of aggression from neighbors, Poles wanted to be reminded that the US would adhere to Article 5 of the NATO treaty, which obliges every member of the alliance to help defend any other NATO nation under attack.

President Obama did not disappoint. Referring to the US's obligation to defend Poland, he used phrases like "unwavering commitment", "solemn duty", "binding obligation" and "unbreakable commitment". "We stand together – now and forever – for your freedom is ours," he said. "Poland will never stand alone." However, one issue was left conspicuously out of the speech: visas. Poland is one of only four EU countries whose citizens still have to obtain a visa to enter the US. Many Poles deeply resent the time-consuming and sometimes humiliating process of queuing, interview-ing and paying – later only to be rejected in some cas-es.

"Poland will never stand alone," pledged US Presi-dent Barack Obama. Photo: Peter Andrews / KPRM

Though visas have dogged bilateral relations for years, there was hardly a murmur about them in the post-speech commentary. Now that Poles feel reassured, the issue has conveniently faded into the background, at least temporarily. President Obama's success contrasts with previous flubs, like when he announced major changes to the missile shield program on the anniversary of Soviet in-vasion or when he used the egregiously erroneous phrase "Polish death camps". His seeming lack of sen-sitivity had Poles wondering how seriously Obama was

weekly newsletter # 038/ 9th June 2014 / page 9

taking the alliance. In the run-up to his visit, the New York Times ran a story on how Poles’ love for the United States had “cooled”. For now, President Obama seems to have brought some warmth back to the Poland-US relationship. His speech drove home the point that the countries stand together. Usually, the president will end a speech with the words "God bless America". In Warsaw, that was the penultimate phrase. Instead, he signed off with: "God bless this unbreakable alliance."

by Andrew Kureth

POLITICS & ECONOMY

European Commission European Commission European Commission European Commission to lift excessive deficit to lift excessive deficit to lift excessive deficit to lift excessive deficit procedure on Polandprocedure on Polandprocedure on Polandprocedure on Poland

Poland needs to take "no further steps" in the exces-sive deficit procedure at present, the European Com-mission said last week , paving the way for suspension of the procedure. However, risks to a durable correc-tion of excessive deficit exist, the European Commis-sion wrote in an assessment of Poland's actions taken in response to the Council recommendation from De-cember 2013. According to the latter, Poland were to reach a head-line deficit of 4.8% of GDP in 2013, 3.9% of GDP in 2014 and of 2.8% of GDP in 2015 (excluding the impact of the asset transfers from the second pillar pension system). Based on the macroeconomic forecast under-lying the Council Recommendation, this is consistent with an improvement of the structural balance of 1% of GDP in 2014 and 1.2% of GDP for 2015. Poland was al-so recommended to implement rigorously the measures it had already announced and adopted, while complementing them with additional measures to

achieve a sustainable correction of the excessive defi-cit by 2015. Poland was given a deadline of 15 April 2014 to take effective action and to report in detail on the consolidation strategy that is envisaged to achieve the recommended targets. "Given that Poland has met the recommended head-line balance as well as the recommended change in the structural balance in 2014, the Commission considers that the procedure is to be held in abeyance," the Eu-ropean Commission wrote. At the same time, the commission sees risks to a dura-ble correction of the excessive deficit, "as the fiscal ef-fort measured by both the corrected change in the structural balance and the bottom-up assessment are well below the recommended level." "In particular, for 2015, and prior to the presentation of the 2015 budget, the Commission services forecast the headline deficit to decline to 3.1% of GDP (exclud-ing the transfer of pension assets) and the structural improvement to reach 0.4% of GDP, thus below the targets recommended by the Council," the document reads. "Therefore, the 2015 budget needs to include structural adjustment measures to ensure compliance with the Council recommendation." Poland is obliged to reduce its public finance sector deficit to below 3% of GDP by 2015.

POLITICS & ECONOMY

May unemployment at May unemployment at May unemployment at May unemployment at 12.5%, says ministry12.5%, says ministry12.5%, says ministry12.5%, says ministry

Poland's unemployment in May declined to 12.5% from 13.0% in April, said Labor Minister Władysław

Kosiniak-Kamysz citing his ministry's estimates. The number of registered jobless declined to 1.993 million, the minister added, adding that unemployment may decline to below 12% in the coming months if the cur-rent positive tendencies on the job market hold. Although improvement on the labor market is typical of this time of the year, when seasonal jobs fully kick off, according to the minister, we are seeing an actual reversal of trends on the job market as a whole.

Registered unemployment in Poland

12%

13%

14%

15%

Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14

Source: GUS

"The main factor is economic growth which guaran-tees an increase in job numbers," he said, adding that investments in special economic zones also played its role. Polish companies notified job agencies of 94,000 va-cancies in May, up 22% year on year, Labor Ministry's data showed. A better May result was last recorded in 2008, the ministry noted. "Taking into consideration the current pace of im-provement the unemployment rate may settle at around 12.5% at the end of the year. However, the de-cline in registered jobless numbers does not necessari-ly mean that new jobs are being created. April data showed no growth in employment despite very good GDP growth data at 3.5%," commented Łukasz Piechowiak, chief economist at Bankier.pl financial portal.

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weekly newsletter # 038 / 9th June 2014 / page 21

KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) Jan '14 Feb '14 Mar '14 Apr '14

Sector y/y m/m y/y m/m y/y m/m y/y m/m

Food & bev +1.8 +1.6 +1.6 -0.2 +1.2 -0.3 +0.3 -0.5

Alcohol, tobacco +3.4 +0.8 +2.2 +1.4 +3.7 +0.7 +3.9 +0.3

Clothing, shoes -5.0 -3.7 -4.7 -1.7 -4.3 +0.8 -4.4 +2.8

Housing +1.9 +0.2 +1.9 +0.1 +1.8 -0.1 +1.7 0.0

Transport -1.2 -1.5 -1.1 +0.4 -2.7 +0.1 -2.1 -0.1

Communications -7.8 -0.3 -3.2 +0.4 -0.3 +0.6 -1.7 -1.5

Gross CPI +0.5 +0.1 +0.7 +0.1 +0.7 +0.1 +0.3 0.0

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

Apr 12

Jun 12

Aug 12

Oct 12

Dec 12

Feb 13

Apr 13

Jun 13

Aug 13

Oct 13

Dec 13

Feb 14

Apr 14

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month Dec '13 Jan '14 Feb '14 Mar '14 Apr '14

m/m (%) +17.3 -21.3 -0.6 +12.5 +2.3

y/y (%) +5.8 +4.8 +7.0 +3.1 +8.4

Year 2009 2010 2011 2012 2013

Turnover in PLNbn 582.8 593.0 646.1 676.0 n/a

y/y (%) +4.3 +5.5 +11.6 +5.6 +2.3

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2009 2010 2011 2012 2013 Jan-Apr

2014

y/y

(%)

Permits 178.8 174.9 184.1 165.1 138.7 48.8 +15.9

Commenced 142.9 158.1 162.2 141.8 127.4 45.1 +27.7

U. construction 670.3 692.7 723.0 713.1 694.0 693.2 -1.0

Completed 160.0 135.7 131.7 152.5 146.1 46.9 -1.8

Source: Central Statistical Office (GUS)

GGGGross Domestic Productross Domestic Productross Domestic Productross Domestic Product

Period Growth y/y unadjusted

GDP in PLN bn current prices

Current account def. in % of GDP

Q1 2014 +3.4% 397,429 n/a

Q4 2013 +2.7% 455,528 -1.5%

Q3 2013 +2.0% 405,554 -1.9%

Q2 2013 +0.8% 296,314 -2.3%

2013 +1.6% 1,635,746 -1.5%

2012 +1.9% 1,596,379 -3.7%

2011 +4.5% 1,528,127 -5.0%

2010 +3.9% 1,416,585 -5.1%

Key Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & Projections

Indicator 2010 2011 2012 2013 *2014

GDP change +3.9% +4.5% +1.9% +1.6% +3.5%

Consumer inflation +2.6% +4.3% +3.7% +0.9% +1.0%

Producer inflation +2.1% +7.6% +3.4% -1.3% -1.4%

CA balance, % of GDP -5.1% -5.0% -3.7% -1.3% -0.6%

Nominal gross wage +3.9% +5.2% +3.7% +3.4% +5.2%

Unemployment** 12.4% 12.5% 13.4% 13.4% 12.3%

EUR/PLN 3.99 4.12 4.19 4.20 4.12

Sources: NBP, BZ WBK, GUS *) projections **) year-end

GroGroGroGross Wagesss Wagesss Wagesss Wages A: avg monthly wages in PLN B: indexed avg wages, 100=2005

Sector Q1 2013 Q2 2013 Q3 2013 Q4 2013

A B A B A B A B

Coal mining 6,060 138 6,290 143 6,061 138 8,615 196

Manufacturing 3,491 152 3,560 155 3,625 158 3,690 161

Energy 6,196 188 5,828 177 6,021 183 6,736 205

Construction 3,556 152 3,693 157 3,766 160 3,895 166

Retail & repairs 3,432 146 3,421 146 3,408 145 3,456 147

Transportation 3,439 122 3,547 125 3,589 127 3,913 138

IT, telecoms 6,685 174 6,707 174 6,654 173 6,695 174

Financial sector 6,356 143 6,702 151 6,109 137 6,602 148

National average 3,741 149 3,613 144 3,652 145 3,823 152

Source: Central Statistical Office (GUS)

Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Mar '14 Apr '14

m/m (%) +14.3 -2.9 +21.5 -64.0 +18.7 +24.2 +3.2

y/y (%) -3.2 -8.9 +5.8 -3.9 +14.4 +17.4 +12.2

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +15.5 +12.1 +5.1 +4.6 +11.8 -0.6 -12.0

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

Aug 11

Nov 11

Feb 12

May 12

Aug 12

Nov 12

Feb 13

May 13

Aug 13

Nov 13

Feb 14

May 14

60

80

100

120 Co nsumer confidence (left axis)

Economic sentiment (right axis)

The economic sentiment (1990-2010 average = 100) is a composite made up of 5 sectoral confidence indicators, which are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable. Source: Eurostat

Producer PriceProducer PriceProducer PriceProducer Pricessss

Month Oct'13 Nov'13 Dec'13 Jan'14 Feb'14 Mar'14 Apr'14

m/m (%) -0.7 -0.3 -0.1 0.0 -0.1 -0.2 -0.1

y/y (%) -1.4 -1.5 -1.0 -1.0 -1.4 -1.3 -0.7

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +2.0 +2.2 +3.4 +2.1 +7.6 +3.3 -1.3

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month Oct'13 Nov'13 Dec'13 Jan'14 Feb'14 Mar'14 Apr'14

m/m (%) -0.1 -0.1 -0.1 -0.2 -0.2 -0.1 0.0

y/y (%) -1.8 -1.7 -1.7 -1.7 -1.6 -1.5 -1.5

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +7.4 +4.8 +0.2 -0.1 +1.0 +0.2 -1.8

Industrial OutputIndustrial OutputIndustrial OutputIndustrial Output

Month Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Mar '14 Apr '14

m/m (%) +6.0 -6.2 -9.7 +2.9 -1.8 +9.4 -2.3

y/y (%) +4.4 +2.9 +6.6 +4.1 +5.3 +5.4 +5.4

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +10.7 +3.6 -3.5 +9.8 +7.7 +1.0 +2.2

weekly newsletter # 038 / 9th June 2014 / page 22

TTTTraderaderaderade

Poland exports and imports according to commodity groups, according to SITC classification

EXPORTS in PLN bn IMPORTS in PLN bn

Jan-Mar

2014 y/y (%)

share (%)

2013 share (%)

Jan-Mar 2014

y/y (%)

share (%)

2013 share (%)

Food and live animals 17,740 +8.5 10.8 69,304 10.9 12,271 +3.2 7.5 47,906 7.4

Beverages and tobacco 2,065 +4.8 1.3 8,624 1.4 899 -6.1 0.6 4,150 0.6

Crude materials except fuels 4,180 -0.9 2.5 15,744 2.5 5,430 -1.4 3.3 21,585 3.3

Fuels etc 7,503 -7.1 4.5 30,013 4.7 19,069 +1.2 11.6 75,539 11.7

Animal and vegetable oils 490 +43.6 0.3 1,864 0.2 628 -0.3 0.4 2,646 0.4

Chemical products 15,190 +7.1 9.2 59,103 9.3 24,737 +6.8 15.1 92,917 14.3

Manufactured goods by material 32,339 +3.1 19.6 129,915 20.3 28,881 +5.9 17.6 112,392 17.3

Machinery, transport equip. 62,802 +11.1 38.0 239,434 37.5 52,769 +3.8 32.2 216,608 33.4

Other manufactured articles 22,557 +14.6 13.7 82,816 13.0 15,598 +11.8 9.5 58,210 9.0

Not classified 217 n/a 0.1 1,782 0.2 3,592 n/a 2.2 16,242 2.6

TOTAL 165,083 +7.8 100 638,599 100 163,874 +3.6 100 648,195 100

Poland's ten largest trading partners, ranked according to 2013

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan-Mar

2014 share *2013 share No Country

Jan-Mar 2014

share *2013 share

1 Germany 43,408 26.3% 159,622 25.0% 1 Germany 35,357 21.6% 139,334 21.5%

2 UK 10,511 6.4% 41,503 6.5% 2 Russia 19,708 12.0% 79,601 12.3%

3 Czech Rep. 10,119 6.1% 39,421 6.2% 3 China 16,346 10.0% 60,914 9.4%

4 France 9,958 6.0% 35,745 5.6% 4 Italy 8,339 5.1% 33,703 5.2%

5 Russia 7,200 4.4% 34,058 5.3% 5 Netherlands 5,973 3.6% 25,005 3.9%

6 Italy 7,409 4.5% 27,450 4.3% 6 France 6,523 4.0% 24,533 3.8%

7 Netherlands 6,715 4.1% 25,292 4.0% 7 Czech Rep. 5,709 3.5% 23,778 3.7%

8 Ukraine n/a n/a 18,037 2.8% 8 USA 3,647 2.2% 17,350 2.7%

9 Sweden 4,843 2.9% 17,498 2.7% 9 UK 4,496 2.7% 16,861 2.6%

10 Slovakia n/a n/a 16,795 2.6% 10 Belgium 4,060 2.5% 14,913 2.3%

Source: Central Statistical Office (GUS) *) preliminary estimates

CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 6 June 2014

100 USD 302.22 ↓

100 EUR 412.11 ↓

100 GBP 507.90 ↓

100 CHF 338.50 ↓

100 DKK 55.23 ↓

100 SEK 45.41 ↓

100 NOK 50.58 ↓

10,000 JPY 295.49 ↓

100 CZK 15.00 ↓

10,000 HUF 135.74 ↓

100 USD/EUR against PLN

300

350

400

450

24 Jun 13

30 A

ug 13

7 N

ov 13

21 Jan 14

28 M

ar 14

6 Jun 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m Jan '14 Feb '14 Mar '14 Apr '14

Monetary base 161,544 158,330 173,213 168,511

M1 546,487 548,033 558,954 548,394

- Currency outside banks 113,455 114,680 116,657 119,261

M2 947,443 954,284 964,624 969,754

- Time deposits 418,259 423,296 422,990 439,137

M3 962,416 968,442 980,377 986,142

- Net foreign assets 140,617 135,759 132,849 126,943 Monetary base: Polish currency emitted by the central bank and money on accounts held with it. M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP

CCCCredirediredireditttt

The financial sector's net lending in PLN bn,

loan stock at the end of period

Type of loan Jan '14 Feb '14 Mar' 14 Apr' 14

Loans to customers 914,189 914,068 923,709 928,450

- to private companies 263,063 263,941 267,553 270,886

- to households 567,984 567,257 569,334 573,332

Total assets of banks 1,628,197 1,616,891 1,628,519 1,639,359

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Nov '13 Dec '13 Jan '14 Feb '14 Mar '14 Apr '14

PLN (up to 1 year) 4.5% 4.3% 4.2% 4.5% 4.5% 4.4%

PLN (up to 5 y ) 4.9% 4.9% 4.9% 4.8% 4.9% 4.8%

PLN (over 5 y) 4.8% 4.7% 4.8% 4.7% 4.7% 4.7%

PLN (total) 4.8% 4.7% 4.8% 4.7% 4.7% 4.7%

EUR (up to 1m EUR) 1.9% 1.9% 2.0% 2.0% 1.9% 2.0%

EUR (over 1m EUR) 3.0% 2.9% 3.6% 3.4% 3.3% 3.0%

Warsaw Inter Bank Offered Rate (WIBOR) as of 6 June 2014

Overnight 1 week 1 month 3 months 6 months

2.59%% 2.60% 2.61% 2.69% 2.71%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.59% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 6 June

'14

Change 30 May

'14

Change end of

'13

↑ Alior Bank 84.96 +2% +4%

↑ Asseco Pol. 42.77 +5% -7%

↑ Bogdanka 122.4 +6% -3%

↑ BZ WBK 398 +9% +3%

↓ Eurocash 42.9 -1% -10%

↑ Grupa Lotos 38.95 +5% +10%

↓ JSW 46.49 -1% -12%

↑ Kernel 31.2 +11% -18%

↑ KGHM 118.4 +2% 0%

↑ LPP 8550 +2% -5%

↑ mBank 541.5 +9% +8%

↑ Orange Pol. 10.64 +2% +9%

↑ Pekao 189.6 +2% +6%

↓ PGE 20.83 -1% +28%

↑ PGNiG 5.07 +9% -2%

↑ PKN Orlen 43 +2% +5%

→ PKO BP 40.8 0% +4%

↑ PZU 461.7 +3% +3%

↑ Synthos 4.56 +3% -17%

↑ Tauron 5.42 +1% +24%

Source: Warsaw Stock Exchange

Key indices

as of 6 June 2014

WIG Total index

55553333,,,,233233233233....18181818 Change 1 week +2% ↑

Change end of '13 +4% ↑

WIG-20 blue chip index

2,2,2,2,667667667667....86868686 Change 1 week +10% ↑

Change end of '13 +11% ↑

WIG Total closing index

last three months

49,000

50,000

51,000

52,000

53,000

54,000

55,000

20 Feb 14

14 M

ar 14

7 A

pr 14

15 M

ay 14

6 Jun 14

weekly newsletter # 038 / 9th June 2014 / page 23

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RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Apr 2014 *

Monthly wages (PLN)

Jan-Apr 2014**

Unemploy-ment

Apr 2014

New dwellings Jan-Apr 2014

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 100.3 112.4 4,191 4,016 148.1 12.7 4,872 91.7

Kujawsko-Pomorskie (Bydgoszcz) 109.8 118.4 3,433 3,188 143.5 17.4 2,082 89.8

Lubelskie (Lublin) 105.5 82.6 3,762 3,012 130.1 14.0 1,654 78.9

Lubuskie (Zielona Góra) 115.9 123.8 3,449 3,067 56.3 14.9 1,127 102.7

Łódzkie (Łódź) 101.2 118.4 3,725 3,258 147.6 13.7 2,228 118.1

Małopolskie (Kraków) 98.0 110.9 3,834 3,314 159.0 11.2 5,499 92.1

Mazowieckie (Warszawa) 105.4 110.5 4,604 4,998 276.8 10.8 9,794 100.9

Opolskie (Opole) 108.0 144.5 3,656 3,461 49.6 13.7 680 125.5

Podkarpackie (Rzeszów) 107.0 116.1 3,424 3,085 148.2 15.8 2,112 102.9

Podlaskie (Białystok) 106.3 119.7 3,303 3,710 67.6 14.5 1,254 113.3

Pomorskie (Gdańsk-Gdynia) 109.3 118.8 4,045 3,438 110.5 12.9 3,089 86.9

Śląskie (Katowice) 100.6 112.2 4,658 3,532 203.7 10.9 3,624 101.4

Świętokrzyskie (Kielce) 117.2 84.7 3,416 3,213 86.1 15.8 970 124.8

Warmińsko-Mazurskie (Olsztyn) 105.1 113.1 3,285 3,061 108.9 20.5 1,533 103.6

Wielkopolskie (Poznań) 108.0 104.6 3,759 3,617 137.8 9.1 4,721 106.7

Zachodniopomorskie (Szczecin) 108.2 96.1 3,548 3,379 105.3 17.1 1,650 88.6

National average 104.7 110.3 4,007 3,751 2,079.0 13.0 46,889 98.2

*) Index 100 = same period of the previous year. ** without social taxes

Sources: Central Statistical Office GUS, NBP, C&W

Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)

Quarter Q3 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13

in Poland 1,381 2,886 175 -3,020 1,885 -3,614

Polish DI -550 -1,203 957 2,588 -1,449 1,588

Year 2008 2009 2010 2011 2012 2013

in Poland 10,128 9,343 10,507 14,896 4,763 -4,574

Polish DI -3,072 -3,335 5,484 -5,935 -607 3,684

Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)

Period 2011 2012 2013 Q2 '13 Q3 '13 Q4 '13

Trade balance -10,059 -5,175 2,309 1,203 1,094 151

Services, net 4,048 4,642 5,249 1,686 1,032 1,257

CA balance -18,519 -14,191 -4,984 486 -2,086 -1,071

CA balance vs GDP -5.0% -3.7% -1.5% -2.3% -1.9% -1.5%

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1,800

2,000

2,200

2,400

2,600

Q1 11

Q3 11

Q1 12

Q3 12

Q1 13

Q3 13

Q1 14

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, Q4 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 563,000 17,000

22.3% 3.6–5.1

Warsaw suburbs 2,063,000 12.5% 2.1–2.8

Central Poland 1,021,000 80,000 15.2% 2.1–3.3

Poznań 1,023,000 215,000 4.4% 2.5–3.15

Upper Silesia 1,431,000 37,000 9.3% 2.4–3.3

Wrocław 780,000 259,000 11.7% 2.6–3.1

Tri-city 184,000 46,000 9.2% 2.8–3.3

Kraków 141,000 0 4.0% 3.3-4.0

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 2H'13 Retail rents**2H'13

Q1 '14

PLN/sq.m

Change

y/y

Headline

rents**

Vacancy

ratio

Retail

centres

High

streets

Warsaw 8,005 -0.1% 11.5-25.5 11.75% 80-90 85

Kraków 6,419 +1.8% 13-15 4.90% 35-45 78

Katowice 5,531 0.0% 13-14 7.30% 35-45 56

Poznań 6,666 +4.0% 14-16 14.20% 35-45 55

Łódź 4,808 -1.8% 12-14 14.40% 35-45 25

Wrocław 5,928 -0.2% 13-15.5 11.75% 35-45 40

Gdańsk 6,031 -5.7% 13-15 11.20% 35-45 31

*avg, offer-based ** EUR/sq.m/month; Retail units 100-150 sq.m

Country Credit RatingsCountry Credit RatingsCountry Credit RatingsCountry Credit Ratings

Agency rating outlook

Fitch Ratings A- stable

Standard & Poor's A- stable

Moody's A2 stable

Source: Rating agencies

Real EarningsReal EarningsReal EarningsReal Earnings

Average gross wage vs inflation.

100

120

140

160

180

Apr10

Dec10

Aug11

Apr12

Dec12

Aug13

Apr14

Wage CPI

Index 100 = Jan 2005. Source: GUS