May 11, 2020 / 1:23 PM / 15 days ago

Polish economy to plunge in second quarter, worst may have passed - state fund

WARSAW (Reuters) - Polish gross domestic product could shrink by 10-15% in the second quarter due to the coronavirus pandemic, but the worst of the economic pain may already have passed, the chief executive of Polish state fund PFR said on Monday.

Recent economic data releases have shown that the largest economy in the European Union’s eastern wing has taken a hammering from the coronavirus pandemic, with manufacturing sentiment hitting a record low in April. Poland started going into lockdown in mid-March.

“Unfortunately the second quarter will be very hard for the economy,” Pawel Borys told a videoconference.

“I am convinced... that in the second half of April we reached the trough as far as the decline in Polish economic activity goes, which obviously doesn’t mean that May will not also be a difficult month, or June,” he added.

PFR is playing a central role in Poland’s “anti-crisis shield” programme, a package of direct spending, guarantees and liquidity measures worth up to 330 billion zlotys ($78 billion) designed to shield the economy from the effects of the virus.

In recent weeks it issued two series of bonds worth almost 35 billion zlotys as part of a 100-billion zloty programme designed to help businesses affected by the crisis.

However, Borys said PFR had no plans to start buying corporate bonds in the primary market, especially those with a poor rating.

“We are focusing on stabilising the situation of businesses... However, when it comes to whether we will buy bonds on the primary market, we do not plan to do that,” he said.

Poland has so far reported 16,206 confirmed cases of the new coronavirus and 803 deaths.

($1 = 4.2121 zlotys)

Reporting by Anna Koper; Writing by Alan Charlish; Editing by Gareth Jones; Editing by Gareth Jones

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