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The Warsaw Voice » Business » March 1, 2013
Business & Economy
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Down in the Dumps
March 1, 2013   
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Signals coming from the Polish economy these days are far from optimistic. Macroeconomic data for December confirms that the economy is slowing down. Industrial output was 10.6 percent lower than a year earlier and the drop was steeper that those recorded during previous slowdowns in 2001 and 2004—though less serious than in 2009. The construction sector has a special reason to worry because it saw a 24.8-percent drop in output.

Preliminary data on Poland’s economic growth last year is not impressive either. The country’s 2012 GDP grew a modest 2 percent, compared with 4.3 percent in 2011, according to the Central Statistical Office (GUS). In the fourth quarter, GDP growth decelerated to under 1 percent. This means that in the first quarter of this year economic growth may be close to zero.

A slide into recession is becoming a real threat, especially as internal demand—which until recently was a major driver of Poland’s economic growth—has weakened significantly. Retail sales in December were 2.5 percent lower in current prices than a year earlier. Notably, this represented the weakest performance since April 2005 and the first drop in retail sales in nominal terms since April 2010.

The uninspiring macroeconomic data is bound to be reflected in projections for Poland’s economic growth in 2013 by international financial institutions. And these are bound to be more pessimistic than last year.

Managers also expect a slowdown. The CEO 2013 Survey by the PwC company shows that most Polish managers expect a difficult year, one in which their companies will find it difficult to increase revenue. Only one in four managers says their company’s revenue will grow. Polish managers are also more cautious in their predictions than their counterparts in other countries in Central and Eastern Europe—though they expect the economy to rebound and return to a fast growth path in three years’ time, PwC says.

An even darker picture emerges from a global optimism survey by Gallup International. It shows that only several nations are more pessimistic than the Poles. And only 6 percent of Polish respondents expect 2013 to be a better year for the economy than 2012. This is far below the world’s average of 35 percent in a survey conducted among 56,000 respondents in 54 countries. Around 28 percent of those surveyed expect the economic situation will deteriorate and 29 percent expect no change.

Why are Polish people so pessimistic? It’s because they are embittered, experts say. The picture of Poland as a “green island” is increasingly blurry and the government has failed to deliver on its promise of putting public finances in order.
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