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The Warsaw Voice » Culture » November 30, -1
Poland by the Numbers
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Yearbook of the Polish Economy, 2006 Edition
November 30, -1   
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I. Polish Economy 2005

In 2005, the Polish economy grew at a slower rate than in 2004. However, the good thing is that the labor market improved and investments accelerated. Economic growth is expected to pick up this year.

According to estimates by the Central Statistical Office (GUS), Poland's gross domestic product grew by 3.2 percent last year, 2.1 percentage points less than in 2004. But one has to remember that it was an exceptional period. Just before Poland's EU accession, there was widespread fear that prices would skyrocket. As a result, Poles started to stock up on goods, buying household appliances, cars, construction materials and even food. In order to meet this growing demand, companies increased production and also built up a huge surplus. In consequence, in the first half of the year, there was an artificially generated economic growth of over 6 percent.

In 2005, Poles were no longer eager to buy as much. Not surprisingly, the economy slowed down. The year started with a growth rate of only 2 percent. But this was mainly a statistical effect, due to high reference level from the previous year. Statistics for the successive quarters of 2005 showed the economy was recovering. Consumption rose and the same could be said about investment. The economy was largely driven by exports. The final three months of the year were excellent, with economic activity much higher at the end of 2005 than at the beginning of the year. The rate of GDP growth reached 4.2 percent. Inflation steadily decreased to a record-low level of 0.7 percent in December 2005 compared to December 2004.

Although exports were the driving force behind the economy in 2005 as a whole, the situation changed in the last quarter of the year with domestic demand becoming the impetus of growth. An increase in consumption and investment turned out to be equally important for GDP growth. In the second quarter, consumption rose by a mere 1.9 percent; in the fourth quarter-3.3 percent. It is noteworthy that in 2005 as a whole and in the final months of the year growth in household consumption was slower than growth in collective consumption, whose impact on the level of domestic demand is weaker. What was really important was growth in investment, particularly its acceleration from quarter to quarter. In the first three months of last year, investment spending increased 1.2 percent, in the final three months-9.8 percent.

What bodes well for future investments is that companies preparing sites for construction recorded an 84-percent increase in sales in 2005 with performance improving from month to month. GUS statistics show that growth in investment spending was faster in the case of buildings (shopping and service outlets, offices, factories and warehouses) than infrastructure (freeways, roads and railway lines).

Investment spending is on the rise, which means that entrepreneurs expect that demand for their products will increase. These expectations are associated with projections of higher consumer demand at home and favorable economic developments reported by Poland's main commercial partners. This should boost imports, also from Poland. If, however, the zloty continues to be strong, which is quite likely, the situation of exporters will be more difficult.

It is beyond a doubt that 2005 was a year of a strong zloty, which started to appreciate in the previous year. This led to the lowest in several years exchange rates of the euro and dollar.

In early March 2005, the U.S. dollar dropped to the lowest level since January 1997, trading to the zloty at only 2.90. The euro was the cheapest in December, when the zloty strengthened tremendously and the euro/zloty rate fell to 3.81, the lowest level in almost four years. As was the case in the previous year, the strength of the zloty resulted from the influx of capital to Poland, including both short-term (speculative) and long-term (investment) capital.

In 2005, Polish companies exported $89.3 billion worth of goods and services. Despite the strong zloty, exports did not slow down, while it was easier for some entrepreneurs to import new technology at attractive prices.

Economic expansion favorably impacted the labor market. After seven years of declining employment, 2005 saw an increase in employment and a decrease in unemployment of 1.4 percentage points to 17.6 percent in December. Despite this improvement, Poland still has the highest unemployment rate in the European Union.


II. Timeline 2005

A Chronicle of Events in months


III. Economic Forecast

Last year was quite good for the Polish economy, but 2006 is expected to be much better. Most projections show that the economy will accelerate rapidly over the next few years.
When reviewing macroeconomic forecasts in November last year to prepare government amendments to the 2006 budget bill, the Ministry of Finance kept its economic growth projection unchanged at 4.3 percent. However, Prime Minister Kazimierz Marcinkiewicz says the 2006 growth rate may reach as much as 5 percent.


IV. Basic Facts

  • Essential information
  • Geographic location
  • Boundaries
  • Natural resources
  • Administrative Division
  • Population
  • Religion
  • Structure of the population
  • Political System
  • President
  • Council of Ministers
  • Parliament
  • International organizations
  • Poland in rankings


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