Territory: 312,685 km²

Population: 38.23m (2002 National Census)
Population growth: -0.06% (average, 2002-2006)
Land boundaries: Belarus, Czech Republic, Germany, Lithuania, Russia, Slovakia, Ukraine

Main Towns: Warsaw (capital), Lodz, Krakow, Wroclaw, Poznan, Katowice, Szczecin, Bydgoszcz, Lublin

Language: Polish

Measures: Metric system

Time: 1 hour ahead of GMT

Currency: Zloty (PLN)
Religions: Roman Catholic (95%), Eastern Orthodox, Protestant and other (5%);
Government ENGINE: Parliamentary democracy

President: Bronislaw Komorowski

Prime Minister: Donald Tusk
EU entry date: 1st May 2004

Public holidays: 1st January (New Year's Day); Easter Monday; 1st May (Labour Day); 3rd May (Polish National Day, Proclamation of 1791 Constitution); Corpus Christi; Assumption; 1st November (All Saints' Day); 11th November (Independence Day); 25th-26th December (Christmas) 

Key economic indicators and forecasts

 

Source: Polish Market Review, November 2007

The strong economic upturn observed in 2006 continued in the first half of this year. Gross domestic product expanded by 6.8% in H1 2007 compared to the same period last year, driven by rapid growth in domestic demand, including both consumption and capital investment. We expect the high level of economic activity to be maintained in the second part of the year, although GDP growth should not exceed 6% y-o-y.

After a bumper 2006, increases in foreign trade turnover were less spectacular in the first half of this year. The value of Polish exports grew by 13.5% (in current prices) in H1 2007 compared to a year ago, while imports increased by 16.6% y-o-y. As a result, the foreign trade deficit topped €7.6bn for the period, i.e. an almost 40% increase on a year ago. We expect the favourable foreign-trade conditions to continue through the remainder of the year. We forecast exports to expand by 13.7% in 2007 and imports by 16.3%.

The widening foreign trade deficit is one of the major factors behind a growing current account imbalance. In H1 2007, the current account deficit totalled €5.7bn, i.e. up by more than two-fifths on the same period last year. We expect this trend to continue in the coming quarters. However, the current account deficit for the year should remain at a moderate level, coming in at not more than 4% of GDP.

Encouraged by rapidly rising demand, companies are expanding their operations. Industrial output grew by 10.7% y-o-y in the first half of the year, only marginally lower than in 2006. Even faster growth was recorded in the construction-assembly output, which jumped by 30.2% y-o-y on the back of a sharp upturn in capital investment and a booming housing market. We should expect only slightly slower growth in output in the second half of the year.

The acceleration in the economy has transformed the labour market. The average monthly employment increased by 3.2% y-o-y in the first half of the year, and the registered unemployment rate dropped from 15.1% to 12.3%. We expect this positive trend to continue in the second half of the year. According to our forecasts, the registered unemployment rate at year-end will be 11.4%.

The recent surge in demand for workers coupled with the massive scale of labour migration to EU countries has led to shortages of skilled workers in many sectors. As a result, wage pressures increased significantly. The average gross monthly wage jumped by 8% in H1 2007 compared to a year ago. We should expect further acceleration in wage growth in the second half of the year, to around 10% y-o-y.

After staying at very low levels throughout 2006, the CPI remained moderate in the first half of this year. Despite the strong growth in domestic demand and faster wage growth, consumer prices increased by only 2.2% y-o-y in H1 2007. Although the fourth quarter should bring higher CPI levels, inflation for the year should remain broadly within the central bank’s target of 2.5% y-o-y.

 

 

Source: “Construction sector in Poland – H2 2007”, PMR Publications, October 2007