Particularly important from the perspective of Polish business is the situation around the Strait of Hormuz, through which one of the most important oil transport routes in the world runs. Any restriction of the flow of raw materials automatically translates into an increase in the price of energy, fuels and logistics costs, and subsequently also affects inflation and the monetary policy of central banks. In practice, this means that decisions taken thousands of kilometres away from Poland begin to affect the day-to-day functioning of domestic enterprises, regardless of the sector or scale of operations.
Predicting costs
The biggest challenge today, however, is not the level of costs themselves, but the difficulty of predicting them. For business, uncertainty is often more problematic than even a high energy or financing price. Indeed, companies can adapt to certain market conditions if they are relatively stable and predictable. It is much more difficult to operate in an environment where the outlook for interest rates, exchange rates or fuel prices can change practically from week to week under the influence of successive geopolitical events.
In this context, the Monetary Policy Council keeping interest rates at the current level does not yet mean that the situation has fully calmed down. The market is increasingly considering a scenario in which a possible prolongation of the conflict in the Middle East could again increase inflationary pressures. This, in turn, would imply the risk of a tightening of monetary policy and an increase in the cost of financing for companies. For many companies especially in sectors based on high operating costs, this would be another element limiting the space for investment and growth.
Turbulence resistance
At the same time, the Polish economy remains relatively resilient to external turbulence, largely due to the experience of recent years. Companies have learnt to function in an environment of high volatility and attach greater importance to liquidity, diversification of funding sources and flexible liability management. There is also a marked change in the approach to business planning in many industries. Entrepreneurs are becoming more cautious about long-term forecasts and alternative scenarios and the ability to react quickly to changing market conditions are becoming more important.
Increasing geopolitical uncertainty also makes it increasingly important for companies to have operational and financial security. In practice, this means not only controlling costs, but also building greater organisational resilience to potential external shocks. In the current reality, the competitive advantage is gained not by those companies that grow the fastest, but by those that are able to maintain stability and liquidity during periods of rapid change.
The coming months will show whether the tensions on the raw materials market will turn out to be just a temporary episode or whether they will become the beginning of another period of economic instability. For Polish business, this means having to operate in a reality in which investment, financing or development decisions are increasingly dependent not only on local macroeconomic data, but also on global politics and geostrategic events.
Author: Paweł Kacprzak, Member of the Management Board, BNP Paribas Faktoring
