Rising tide lifts the economic boat
Surges in exports, consumption, salaries and retail trade have been the driving force in the Polish economy this year.
According to a recent report by the Center for Social and Economic Research (CASE), exports have grown by 21 percent compared with the same period of 2005 and reached 38 percent of GDP. Household consumption increased by five percent and salaries by 4.1 percent, and retail trade turnover shot up by 14 percent.
Simultaneously, industrial production soared by more than 12 percent. The good financial condition of companies has resulted in a 2.6-percent growth of employment and laid the foundations for future investment.
Katarzyna Piętka from CASE says that all demand factors are increasing and the growth is balanced. "We assume that in 2006 and 2007, exports will continue rising; we expect an upturn of the economy in the EU and our Eastern partners. Household consumption will still be a driving factor for the economy and will rise, enterprises will increase employment by two to three percent, salaries will grow not only because of the nominal growth but also low inflation. The increase of investments in companies should reach eight percent this year and 10 percent next year. However, we are worried by the absorption of structural funds. We know that over half of the contracts have been signed but the absorption is actually low," says Piętka.
CASE's Przemysław Woniak says this year's economic growth will reach 4.5 percent and 4.7 percent in 2005 and the unemployment rate will fall to 14.8 percent by the end of next year. "Poland's inflation rate is still the lowest within the EU and comes to 0.6 percent, largely due to a fall in food prices caused by high supply on the market and the strong złoty. Yearly inflation should creep up to one percent at the end of 2006 and to two percent next year," says Woniak. However, in 2007 the budget deficit will be higher and reach three percent of GDP.
