The Vienna Institute Monthly Report 1999/6
SUMMARIES

Transition countries: Agriculture in 1998
Following slight growth in 1997, total agricultural output in the CEECs was down 1.8% in 1998, mostly due to the drop in Romania. The agricultural sector in Russia and Ukraine is still in deep crisis: agricultural production in both countries fell by another 12% and 8% respectively. In the wake of the financial collapse in Russia, the situation on the international agro-food markets has worsened dramatically: the supply of the most important commodities considerably exceed demand, resulting in a plunge of prices. The countries most involved in the agro-food business reacted with growing protectionism. The 1998 agro-food trade of the CEECs recorded a deficit of some USD 0.3 bn, after a surplus of USD 0.5 bn in 1997. Russia’s agro-food deficit contracted by USD 3 bn to USD 10 bn due to strong currency devaluation. Agricultural subsidies increased in the CEECs, but decreased in Russia. On average the transition countries support farming still much less than the EU.
 

Financial standing of the Polish banking sector
As in previous years, total assets and liabilities of the Polish banking sector rose quite strongly in 1998. Credit to the non-financial sector rose less strongly yet and there was an expansion of NBP short-term bills in banks' assets. The share of foreign-exchange credit increased rapidly.
Available data suggest that the quality of assets remained high and the risk indicators quite low. Yet, the process of steady reductions of the share of problematic credits, which started in 1993, seems to have come to a halt.
Gross and net profit of the banking sector both declined quite strongly. Apart from high net provisions (also on account of banks’ involvement in Russia) there was a deterioration of net interest, net commissions and net income from financial transactions. The weakening of profits seems to have continued in the first quarter of 1999.
The currently observed deterioration of profits in the non-financial corporate sector and weak overall growth indicate that the banking sector is heading for more difficult times.
 
 

 

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