| Inflation |
(CPI year-on-year, Jul ‘11, GUS) |
4.1% |
| Unemployment |
(claimant rate Jul '11, GUS) |
11.7% |
| GDP growth, latest |
(y-o-y Q2 2011, GUS) |
4.3% |
| GDP growth 2010 |
(GUS) |
3.8% |
| Capital investment growth |
(y-o-y Q2 2011, GUS) |
1.9% |
| Retail sales |
(y-o-y to Jun '11, GUS) |
8.2% |
| Exports |
(Q1 ‘11, GUS - up 15.5% on 'Q1 ‘10) |
€31.0 billion |
| Imports |
(Q1 ‘11, GUS - up 10.9% on 'Q1 ‘10) |
€33.0 billion |
| Average wages (private sector, monthly gross) |
(GUS, Jul '11 - up 5.2% y-o-y) |
3,611.56 PLN (= €870 / £760) |
| Statutory Minimum Wage (monthly gross) |
(in force since 1 Jan '11, up 5.2% from 2010 ) |
1,386.00 PLN (= €350 / £300) |
| NBP reference base rate |
(last change Jun '11, 25 basis point rise) |
4.50% |
| Industrial output |
(year-on-year, Jul '11, GUS) |
1.8% |
Commentary
As the global economy tipped over the precipice in October 2008, Poland’s economy was in sound enough condition, its forward momentum strong enough to avoid recession. And indeed, in 2009, Poland was the only EU member state to continue showing economic growth. GDP growth for the whole of 2009 was 1.6% higher than in 2008.
The question is, as the world is poised for a second bout of recession, whether Poland’s economy can escape a second time?
The effect of the inflow of EU funds into Poland has been part of the explanation for how Poland escaped recession. Much has been earmarked for infrastructure spending; Poland is engaged in a huge road-building programme.
Manufacturing output has only just recently started to grow at a much slower pace (1.8% in the year to Jul ‘11) after a long run of double-digit growth, mainly driven by exports. Being Germany’s manufacturing outsourcing backyard had helped boost Poland’s industrial production, which in turn added significantly to GDP growth. Consumer spending and capital investment, both private and public, have also been growing.
Trade figures for the 2010 show that Poland's exports grew slightly slower than imports, slightly narrowing Poland's trade deficit.
Inflation has started falling back from May 2011’s alarming high of 5.0% – well above the target range of the National Bank of Poland, having hit a low of 2.0% in July 2010. Wage inflation (5.2% in the year to July 2011) is fuelled to some extent by rising global food prices. The National Bank of Poland has taken steps to tighten money supply by three consecutive monthly rises in base rates, each of 25 basis points, in April, May and June 2011.
With its low wages, high education levels and nearness to rich western European markets, Poland has good prospects to keeping its head above water should another recession hit the global economy.
Demographics
Poland’s largest age cohort will be 28 years old in 2011 (all 690,000 of them!); this is Poland's demographic high-water mark. By contrast, the number of seven year olds is a mere 350,000, the low-water mark. Over the next 15 years, the number of young people entering the labour market will fall by an average of 17,000 a year.
The shock to national accounts of large numbers of post-war baby-boomers hitting pensionable age in the early part of the next decade (65 year-olds born after 1945) will be mitigated by the extremely low number of Poles in pre-pensionable age in the labour market. Only 28% of Poland’s over-55s are economically active (compared to 58% in the UK).
Unemployment
Falling rapidly from a high of 20.4% in February 2004, unemployment in Poland fell faster than in any major economy at any time in peacetime (if you can cite a faster fall, please let the author know!). By October 2008, it was officially 8.8%, though the BAEL measure used by Eurostat had Poland’s unemployment at 6.7% – this excludes those fictitiously registered as unemployed by working in the grey economy. October 2008 marked the lowest point in unemployment in recent years.
Two month later, the first signs of rising joblessness were rapidly becoming apparent. And by February '11 it had jumped from 8.8% to 13.2%.
What’s curious is that while the number of unemployed rose – so did the number of people at work! From October 2008 to April 2011, registered unemployment rose by nearly 700,000, while the number of people at work rose by over 100,000 in the private sector and some 90,000 in the public sector! One explanation for this curious phenomenon is that a large number of migrant Poles, having lost their jobs during the crisis, have returned home to sign on for unemployment benefit in Poland.
The zloty
The zloty, which had been rising rapidly in value against the pound, the euro and dollar in the four years since EU Accession, suffered a major depreciation in the aftermath of the October 2008 financial crisis. Between August '08 and February '09, the zloty depreciated by nearly 40% against the euro, making Poland far more competitive for inward investment and for export.
Since then, the zloty has bounced back, though is still far weaker than the 3.20 zł = 1 EUR we had in August 2008. The Greek and Irish crises, however, have knocked the steam out of the zloty's rise against major currencies (good news for exporters); throughout 2010 and into 2011 the zloty had stabilised at around the 4.00=€ and 4.50=£ marks. The wobbles on the markets caused by the threat of sovereign defaults in the euro zone hit the zloty this summer, knocking it back to 4.15=€ and 4.70=£.
Poland is obliged by the terms of its EU Accession Treaty to replace the zloty with the euro. The only questions are when, and at what rate. Its budget deficit remains way above the Maastricht criteria, as such the earliest realistic date for Poland joining the eurozone is 2016-17.
UK-Polish trade
Trade between the two countries has grown consistently over the past 17 years; UK exports to Poland faltered slightly in 2009 before bouncing back strongly last year. The first half of 2011 was the best for bilateral trade ever; the value of trade between the UK and Poland in the first half of this year exceeded that for the whole of 2005, the first full year of Poland’s EU membership. Poland has a larger trade surplus with the UK than with any other trading partner; Britain is Poland’s third-largest export market and its eighth-largest import source.
Links:
GUS, the government's central statistical office, has a small section in English that offers some indicators.
Central Bank of Poland
Eurostat