Poland GDP

Poland’s economy turned in an unexpectedly strong performance last year, growing by 1.6 per cent according to data released Thursday, but that did not stop the zloty from losing strength against the dollar and euro amid continued emerging market worries.

The economy’s expansion surprised on the upside – most analysts had pencilled in only about 1.5 per cent growth. The final result for the year was also significantly higher than had been expected just a few months ago, when first quarter growth slowed to only an annual 0.5 per cent. 

Polish retail sales grew in May according to figures released on Tuesday, in a sign that growth in the Polish economy is slowly accelerating. Sales were up 0.5 per cent year on year, above market expectations of a 0.1 per cent fall.

Households remain cautious about spending but the figure provides some grounds for optimism. Sales of pharmaceuticals and cosmetics grew by an annual 10.5 per cent, while sales of vehicles and durable goods increased by an annual 5.1 per cent and 7.5 per cent respectively. 

Polish retail sales slumped in April according to figures released on Friday, falling by an annual 0.2 per cent, worse than consensus which had been for a 1.1 per cent increase, in yet another indication of the severity of the slowdown hitting the Polish economy. 

Should Poles be getting out their umbrellas, or will a simple spring coat suffice? That’s the question as a debate begins over whether the clouds hanging over the Polish economy are merely grey or a much darker hue.

The gloomier forecast comes form the European Commission, which sees Polish growth slowing to 1.1 per cent this year followed by a recovery of 2.2 per cent in 2014. It correct, that lacklustre growth rate will have dire consequences for the country’s public finances. 

Poland’s economy grew by 2 per cent last year, the government’s statistical agency reported on Tuesday morning, a dramatic slowdown from the 4.3 per cent growth noted in 2011, but slightly better than the 1.9 per cent consensus estimate.

The largest factor in eking out even that small rate of growth came from exports, with domestic demand essentially flatlining, and investments in durable goods rising by only 0.6 per cent compared to a 9 per cent increase the year before. 

Jacek Rostowski (pictured), Poland’s finance minister, long insisted he would succeed in driving Poland’s deficit below 3 per cent of GDP this year, despite a chorus of scepticism from economists who felt that the target was very optimistic given the eurozone’s economic turmoil.

On Wednesday, Rostowski had to concede defeat, admitting that the deficit would hit 3.5 per cent of GDP this year instead of the planned 2.9 per cent, largely because of Poland’s slowing economy, affected by slumping domestic demand and continuing gloom in the eurozone.