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Polish economy resisting stagflation
Poland’s economy proved resistant to stagflation trends and the worldwide financial crisis in Q1/2008, hence it may be expected to continue to grow rapidly - at 5.3% in 2008 and at 5.5% in 2009 compared to last year’s 6.6%, according to the quarterly report of the Centre for Social and Economic Research (CASE).
In February, CASE saw this year’s GDP growth at 5.0%. In Q1, the trend of the economy’s growing at a pace exceeding 6% y/y was retained (compared to 6.4% in Q4/2007) on the back of robust domestic demand and consumption as well as high investments in fixed-assets, but it should slow down in next quarters to around 5%, giving the annual figure at 5.3%, CASE said.
High GDP dynamics translated into fast employment growth (which the finance ministry estimates at 3.1% for 2007) and the decline of the unemployment rate - seen by CASE at 9.1% at the end of 2008 (measured on the basis of the number of the registered unemployed) compared to the government’s forecasts of a 9.8-9.9%. CASE sees the figure at 8% at the end of 2009.
However, CASE warns that due to shortages of workforce in selected sectors of the economy, the wage growth that outpaces the rise in work efficiency would likely beef up inflationary pressures. CASE analysts see this year’s average annual inflation at 4% compared to last year’s 2.5% and compared to 3.6% expected for this year in February. They project slowdown of inflation to 3% in 2009 in the aftermath of interest rates hikes - the Monetary Policy Council (RPP) had raised its rates seven times in the cycle since in April 2007. However, since the cycle is close to its conclusion, the zloty’s strengthening would likely lose momentum.
