Excerpts from the Ministry of Economy report on the Poland’s economics in 2008:Synthesis
• The year 2008 was a period of gradual economic slowdown in Poland. However there is still relatively high economic growth, and consequences of the world crisis on the financial market had limited scope. The sources of economic growth (recovery of investment demand, stable and high growth of consumption and fast growing exports) allowed to gain one of the better result in EU. On the other hand it should be underlined that in the latest months of the year tendency debilitated.
• In the three-quarter period of 2008 GDP growth maintained at the high level, though the dynamic brought to a standstill in the last quarter. In accordance with provisional CSO estimates GDP growth in the year 2008 reached 4.8%. The fastest growth was observed in the 1st quarter and amounted to 6.0% and in the 4th quarter growth reached ca. 2.8% (in accordance with DAF MoE estimates), which was the lowest in the year.
• In the year 2008 sold production of industry went up by ca. 3.3% in complete statistical population and 3.5% in entities with more than 9 employees. It had been the worst result since 2002.
• In the year 2008 production in construction exceeded previous year’s level by ca. 11% for complete statistical population, and by 12.9% in entities with more than 9 employees. Given the ‘base effect’ and the situation in the global real estate market – the results should be positively assessed.
• A good performance in domestic trade recorded in 2007 maintained in the year 2008 and an increase in volume of retail sales amounted to ca. 5.3% for complete statistical population and by 9.6% in entities with more than 9 employees.
• According to preliminary CSO data in the period of January-December 2008 the volume of the exports amounted to EUR 107.5bn and was by 14.0% higher than a year ago. The volume of imports stood at EUR 129.8bn and was by 17.4% higher than in the previous year. The negative balance of a foreign trade turnover reached a level of EUR 22.3bn. The deterioration of deficit was caused by significant increase deficit in turnover with developing countries and Central and Eastern countries. Simultaneously, the surplus in foreign trade with developed countries slightly decreased.
• According to provisional NBP data, in the year 2008 deterioration of a negative balance of the current account was observed, comparing to the previous year. It resulted from higher negative balance on goods. The FDI inflow was lower than a year ago.
• In the period of January-December 2008 the annual average consumer price index (CPI) stood at a lower level than in 2007 and amounted to 4.2%. Simultaneously weakening of inflation pressure was observed. In the twelve-month period of 2008, the producer price index exceeded previous year’s level by 2.6% and construction prices increased by 5%.
• Labour market performance was still improved. In the year 2008 the average employment in enterprise sector was 4.8% higher than a year before. At the end of December 2008 the number of registered unemployed was lower comparing to December 2007 by 15.6%, and the registered unemployment rate accounted for 9.5% (against 11.2% in December 2007). It should be underlined that the end of the year showed first effects of deteriorating of economic situation.
• In the year 2008, in real terms, increased salaries in enterprise sector and retirement payments and pensions from non-agriculture security system. The purchasing power of retirement pays and pensions of individual farmers also increased comparing to 2007.
• In the year 2008 the budget deficit was recorded and amounted PLN 24.6 bn. State budget revenues shaped at a level PLN 254.1 bn and represented 90.1% planned in budgetary law. Expenditures ensured execution in 90.2% (PLN 278.7 bn). Comparing to the previous year, execution of receipts was lower by 13.0 pp. and expenditures by 7.5 pp. Concerning revenues, it was caused by receipts from indirect taxes, however concerning expenditures general subsidies to local self-government entities were crucial factor.
• In the year 2008, the Monetary Policy Council changed interest rates six times. MPC raised them four times by 0.25 pp each time and cut by 1.0pp in total, at the end of the year.
• As regards the foreign exchange market, until July 2008 the zloty appreciated against the US dollar as well as against the euro, comparing to the year 2007. However in the rest months of the year tendency reversed. In the whole year average exchange rate strengthened. It resulted from macroeconomic data, that is fast economic growth, improvement on the labour market, as well as intensive investment and consumption demand.
