quinta-feira, 17 de outubro de 2013

Macroeconomic Analysis of Polish Economy

Poland, with a population of over 38.5 million inhabitants, is the largest member of the European Union among all the countries of Central and Eastern Europe. In terms of the number of inhabitants, Poland is the 33th largest country in the world and the 6th largest in the EU. In terms of gross domestic product (GDP), Poland is the 8th biggest economy in the EU and the 24rd biggest economy in the world (2012 GDP in current prices, USD-denominated, IMF, World Economic Outlook Database, April 2013).

Demographic situation
Over the recent years we have observed a lowering of demographic dependency ratio: in 2012 there were 57 persons at non-productive age for every 100 persons at productive age, while in 2002 the ratio was 62:100.
A positive phenomenon observed in the years has been a continuous increase of Polish educational attainment level. The percentage of Poles with education at the secondary or higher level increased from 41.4% in 2002 to 48.6% in 2012. The most rapid growth was recorded in the group of people with higher education.

Labor market
The total unemployment rate for 2012 is 10.1%. There is an increasement of this economic indicator in the last 4 years.

Gross domestic product
The Economy of Poland is a high income economy (classified as "high-income economy" by the World Bank) and one of the fastest growing economies in Europe, with a yearly growth rate of over 3.0% before the late-2000s recession. It is the only member country of the European Union to have avoided a decline in GDP, meaning that in 2009 Poland has created the most GDP growth in the EU. As in December 2009 the Polish economy had not entered recession, nor contracted. According to the Central Statistical Office of Poland, in 2010 the Polish economic grow th rate was 3.9%, which was one of the best results in Europe.
Poland’s GDP increased by 1.9% y/y in FY 2012, according to the updated estimates by GUS published in April 2013. At the same time, investments decreased by an estimated 0.8% y/y, while domestic demandshrank by 0.2%. These data show a visible economic slowdown compared with the last year, when GDP grew by 4.5% in the entire year with investments increasing by 8.5% and domestic demand by 3.6%.
The GUS and Eurostat data indicate that in terms of 2012 GDP growth rate Poland ranked fifth among 27 EU member states, falling behind the three Baltic States and Slovakia. Polish GDP growth may further slow down to 1.1% y/y in 2013 and then again accelerate to 2.2% in 2014, according to the newest, spring forecast by the European Commission. Over the recent years, observers have grown accustomed to the Polish economy’s relatively good performance against the backdrop of the region of Central and Eastern Europe as well as the entire European Union. It was particularly visible in 2009, when Polish GDP, according to Eurostatmdata, grew 1.6%, making Poland the only EU country with a positive economic growth and earning the country the name of the “green island”. It was also in 2010 and 2011 that Polish economy stood out among European peers: the Polish GDP growth of 3.9% in 2010 was the third highest in the EU, while the 4.5% economic growth in 2011 ranked Poland fourth among the 27 member states.
The Polish state has steadfastly pursued a policy of economic liberalization throughout the 1990s, with positive results for economic growth but negative results for some sectors of the population. The privatization of small and medium state-owned companies and a liberal law on establishing new firms has encouraged the development of the private business sector, which has been the main drive for Poland's economic growth. The agricultural sector remains handicapped by structural problems, surplus labor, inefficient small farms, and a lack of investment. Restructuring and privatization of "sensitive sectors" (e.g. coal), has also been slow, but recent foreign investments in energy and steel have begun to turn the tide. Recent reforms in health care, education, the pension system, and state administration have resulted in larger than expected fiscal pressures.
Improving this account deficit and tightening monetary policy, with focus on inflation, are priorities for the Polish government. Further progress in public finance depends mainly on the reduction of public sector employment, and an overhaul of the tax code to incorporate farmers, who currently pay significantly lower taxes than other people with similar income levels. Despite some continued systemic problems, Poland has made great economic progress over the last decade. The largest component of its economy is the service sector.

Polish internal market and labor market
Strong internal demand and solid private consumption used to be named by economists as strengths of the Polish economy, helping the country to retain its economic growth even in the face of difficult conditions on international markets. The current economic slowdown in Europe, however, has not left the Polish internal market unscathed: while private consumption still grew in 2012 (by 0.8% y/y) and had a positive contribution to GDP (+0.5 pp), domestic demand actually shrunk by 0.2% y/y and had a negative impact on GDP (-0.2 pp), according to revised GUS data.

Teodora Machkanova


[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1ºciclo) da EGG/UMinho]

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