Good-news GUS

The value of Poland's economy reached zł.967.7 billion last year, growing by 3.2 percent over 2004, the Central Statistics Office (GUS) revealed. This figure is not as impressive as the 5.3 percent GDP growth recorded in 2004, when the economy was boosted by EU accession. However, the Gdańsk Institute for Market Economics (IBnGR) highlights that the growth of GDP  quarter by quarter in 2005 was a "mirror image" of 2004, when the so called "accession bubble" contributed to the significant economic growth in the first half of the year and its decrease in the last six months. The reverse was true in 2005.

Production line

GUS reports that industrial output increased by 3.8 percent compared to 2004, while production in the construction sector recorded five-percent growth, and was the fastest developing sector of the Polish economy. Last year retail sales were slightly lower than in 2004 (by one percent), while sales of transport services increased by one percent. Agricultural production dropped by 2.1 percent.

Driving force

According to IbnGR, the driving force behind the Polish economy last year was exports, which recorded growth of 4.9 percent (calculated in current prices in złoty), despite the strengthening of the currency.

"In 2005 exports that played significant role in Poland's economic growth. However, according to our prognosis, in 2006 the roles of export and domestic demand are going to line up," said Marcin Peterlik from IBnGR. Domestic demand grew last year by 1.9 percent, compared to 5.9 percent growth in 2004. According to IBnGR, the fastest-growing element of  domestic demand in Poland was investment growth. The Institute estimates that in Q4 of 2005 it reached 7.6 percent, while this year investment growth should reach 9.1 percent.

IBnGR forecasts that in 2006-2007, Poland's economy will grow faster than in 2005, but is unlikely to exceed 5 percent. The Institute predicts that in 2006 GDP growth could reach 4.4 percent and 4.9 percent a year later.

Domestic demand

Domestic demand in 2006 is expected to grow by 4.1 percent. Export figures in 2006-2007 will remain as high as last year's, but due to the rebound in domestic demand, exports' overall contribution to GDP growth will decline. In 2006 exports will grow 7.7 percent, accompanied by 7.1 percent growth in imports.

IBnGR's based its prognosis on several assumptions, such as that the country's political scene will stabilize and that populist parties will not gain influence, that Poland issues EU funds more effectively, as well as that no unexpected shocks, such as an energy crisis or a terrorist attack, occur.

GUS' good news for 2005 and IBnGR's optimistic prognosis was confirmed by the head of Poland's Central Bank, Leszek Balcerowicz. "Poland's GDP is accelerating and will grow faster in 2007. This is the best time to reform public finance and cut unnecessary expenditures. Poland's governing establishment was given a present in the form of favorable circumstances to remove the biggest obstacles on Poland's way to faster growth".