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The Warsaw Voice » Business » December 16, 2009
Economy in 2009
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Poland Top of the League in EU
December 16, 2009   
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Poland is coping better than other countries with the fallout of the global financial crisis and is likely to be the only EU member state to see its economy grow this year.

According to figures released by the government's Central Statistical Office (GUS) in late November, Poland's non-seasonally-adjusted GDP grew 1.7 percent in the third quarter of the year compared with the same period last year. In the second quarter, the economy grew 1.1 percent and in the first quarter it expanded by 0.8 percent.

"The GDP growth rate is higher than anyone expected just a few weeks ago," said Prime Minister Donald Tusk commenting on the GUS data. He added that the worst part of the economic crisis in Poland-as well as elsewhere in Europe-was over.

The GUS data shows that domestic demand dropped by only 1.2 percent in the third quarter in year-on-year terms. In the second quarter, domestic demand was 2.1 percent lower than a year earlier. Individual consumption increased by 2.2 percent year on year, compared with 1.7 percent in the second quarter, which shows that consumers were again eager to spend money. Investment is falling at a slower rate. In the third quarter, it was 1.5 percent lower than in the same period last year, compared with a 3-percent drop in the second quarter.

For several months Poland has outclassed other European countries in terms of economic performance. In the third quarter, the EU's seasonally adjusted GDP shrank by 0.2 percent compared with the third quarter of last year, and the euro-zone GDP contracted by 0.4 percent, according to preliminary data published by Eurostat, the EU's statistics office. In year-on-year terms, the GDP fell by 4.3 percent in the EU as a whole and by 4.1 percent in the eurozone.

Eurostat provided data on 18 of the EU's 27 members and said that none of these countries recorded a positive growth rate in the third quarter. The sharpest contraction was recorded in Estonia and Lithuania, by 15.3 percent and 14.3 percent respectively, while Greece saw the smallest GDP drop, at 1.6 percent.

Poland owes its positive growth rate chiefly to exports as well as upbeat consumption. Exports contributed 3 percentage points and consumption added 1.6 points to GDP growth in the third quarter.

The increase in exports is especially good news at a time when most countries are complaining particularly about declining sales abroad. Poland's strong export position is largely due to a weak zloty. Although the Polish currency is appreciating, it is still 10 or so percent weaker against the euro and dollar than at the beginning of last year. In the summer of 2008, the dollar cost just over zl.2, while now it runs at zl.2.70-2.80. But this helps exporters, experts say.

Capital formation took away 2.9 percentage points from GDP growth, which shows that investment has not recovered yet.

The encouraging third-quarter data boded well for the country's economic growth in all of 2009. There is every indication that Poland will be the only or one of few EU countries with positive GDP growth this year. In a recent projection, the Economy Ministry's Department for Analyses and Forecasts put Poland's GDP growth this year at 1.5 percent. This is more than recently projected for Poland by the Organization for Economic Cooperation and Development (+1.4 percent), the European Commission (+1.2 percent), the International Monetary Fund (+1.1 percent), and the World Bank (+1.1 percent)-and also more than officially projected by the Polish government. Its 2010 budget bill foresees that Poland's GDP will grow 0.9 percent this year.

Economists at Bank of America Corp.-Merrill Lynch & Co. are even more optimistic. In October, they upgraded their growth projections for Poland from 1.1 percent to 1.8 percent this year. The economists say that the country's economic growth may accelerate to 2 percent in the third quarter and 3 percent in the fourth quarter because the latest economic revival has been stronger than predicted. Polish experts at the Economy Ministry predict that economic growth will reach almost 2.5 percent in the fourth quarter.
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