Poland continues to surprise on the upside

By bne IntelliNews November 25, 2014

Jan Cienski in Warsaw -


While the western European economies look increasingly troubled, Poland continues to surprise on the upside, with new reports showing falls in unemployment and resilience in consumer spending – not long after flash third quarter GDP numbers also came in better than expected.

The driver behind the good news seems to be domestic demand, the same factor that helped keep the economy from falling into recession during the early years of the economic crisis. The country’s statistical agency showed retail sales rising by an annual 3.7% in real terms in October, the fastest pace since May – this despite lacklustre car sales because of changes in tax regulation.

“This reinforces our view that private consumption is likely to remain an important contributor to economic growth in the coming quarters, as the real wage bill and consumer lending continue to grow at a high pace,” noted Cezary Chrapek of Citi Research.

Robust consumer spending came at the same time as good employment data. Poland’s unemployment rate dipped to 11.3%, down 0.2 percentage points from September and the lowest in four years. The rate showed unusual strength for the late autumn, a time when unemployment usually rises.  

As well, Polish average salaries were up by 2.1% from September at 3,981 zlotys (€952). Fatter pay packets are explained in part by rising employment – there were 45,000 more people hired in October than for the same month a year ago. The rise in salaries is especially significant during a period of mild deflation, translating into increased purchasing power.

“We can see that the stabilisation on the labour market is translating into a greater willingness of households to shop,” said Malgorzata Starczewska-Krzysztoszek, chief economist with Lewiatan, the Polish employers’ confederation.

A healthier domestic sector was likely one of the reasons for Poland’s strong third quarter. Flash GDP estimates released earlier this month came in at an annual 3.3%, significantly above analysts’ expectations.

The robust data has most analysts predicting that the central bank’s rate-setting Monetary Policy Council will probably leave rates on hold when it meets next month – that despite doveish pressure from central bank governor Marek Belka.

“We currently see the rate stability scenario as more likely, but the risks remain that we will see another cut,” wrote Katarzyna Rzentarzewska with Erste Group.


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