Key macroeconomic indicators updated 18 March 2010

As the global economy tipped over the precipice in October 2008, Poland’s economy was essentially in sound condition, its forward momentum strong enough to give it a good chance of avoiding the worst.  And indeed, in 2009, Poland was the only EU member state to continue showing economic growth.

In terms of raw macroeconomic data, Poland is over the worst. In Q4, the economy grew at 3.1%% year-on-year, following growth of 1.7% in Q3, 1.1% in Q2 and 0.8% in Q1. But looking back at the past economic slowdown, in 2001, when the Q3 growth was a mere 0.3%, unemployment kept on rising for another two and half years, rising from 16.2% in July 2001 to 20.6% in February 2004, when GDP was growing at 6.9%. Similarly, corporate bankruptcies continued to increase long after growth began to accelerate.

The effect of the inflow of EU funds into Poland has been part of the explanation. Much has been earmarked for infrastructure spending; Poland is engaged in a huge roadbuilding programme.

Manufacturing output has picked up with a 8.5% jump in the year to January '10, reflecting a continued strong rebound from the collapse a year earlier. While Poland avoided recession, its manufacturing sector did experience a marked contraction last year.

Trade figures for the 2009 show that Poland's exports fell compared to 2008, but imports fell faster, helping to narrow Poland's trade deficit for the half year to PLN 16bn from 43bn PLN in the first half of 2008.

Polish exports to the UK were higher in 2009 than in 2008 in sterling terms, but slightly down in zloty terms. UK exports to Poland were down on 2008.

Poland's GDP in 2009 was buoyed up by private consumption, continued growing throughout the year.

Demographics

Poland’s largest age cohort will be 27 years old in 2010 (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 20 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 me 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. By February '10 it had jumped by over 600,000, from 8.8% to 13.0%.

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. 

UK-Polish trade

After 16 years of strong growth, bilateral trade, UK exports to Poland have faltered, while Polish exports to the UK continue to show growth (albeit at a much slower pace). 

Links:

GUS, the government's central statistical office, has a small section in English that offers some indicators.

Central Bank of Poland

Eurostat