“Of course, economic forecasts must be revised when new information arrives and are thus necessarily provisional.” The words of Ben Bernanke, for eight years chairman of the US Federal Reserve Bank, which are self-evidently correct and underline the self-evident point that nobody can predict the future of the economy, or anything, with certainty, Be that as it may, in Poland the economy, despite some concerns about developments in the political sphere, seems to be performing well, with a number of economic forecasts being revised upwards.
On Thursday, the European Commission raised its forecast for Polish GDP growth for 2017 from 3.2 per cent to 3.5 per cent and from 3.1 per cent to 3.2 per cent for 2018. “The continuation of solid growth in private consumption, together with a recovery in investment, is forecast to lead to faster economic growth in 2017 and 2018,” the commission said. The EC also noted that the Polish labour market is performing well, predicting that unemployment will fall from 6.2 percent – as calculated using Eurostat’s methods – in 2016 to 5.2 percent in 2017 and 4.4 percent in 2018. The commission also said that a recently introduced lower retirement age could put pressure on the workforce.
Deputy prime minister and development and finance minister, Mateusz Morawiecki told Poland’s PAP news agency last week that the EC’s latest projection is “too conservative” and that GDP growth in 2017 may exceed the government’s own “cautious” target of 3.6 per cent and suggested that economic growth in the first quarter of this was probably faster than most economists expected.
And, it seems, he may have been right. According to the central statistical office on Tuesday, in a flash estimate and giving seasonally unadjusted figures, the economy grew by 4 per cent, year on year, in the first quarter. Economists surveyed by the PAP Biznes news agency had expected Polish GDP to grow 3.9 percent year on year. “Seasonally adjusted GDP… increased by 1.0 percent in real terms compared to the previous quarter and was 4.1 per cent higher than a year ago,” the statistical office said. In seasonally unadjusted terms, GDP rose 2.5 percent in the fourth quarter of last year. In the third quarter it increased by 2.4 pe rcent, in the second quarter by 3 per cent and in the first quarter by 2.9 per cent. Last year as a whole saw GDP growth of 2.7 per cent.
Which is encouraging, as is the decision by ratings agency Moody’s to raise its outlook for Poland from negative to stable while maintaining the A2 credit rating. In a statement on Friday, the agency said that “the primary driver … is Moody’s expectation that the downside risks to the fiscal stance that led to the negative outlook one year ago are abating,” Moody’s added that the investment climate under PiS had not significantly deteriorated, fear of such a deterioration having been among the factors behind the agency’s decision to lower Poland’s outlook from stable to negative last year. Friday’s announcement reversed that downgrade. “Despite some increase in policy uncertainty post-2015 elections, the evidence does not suggest that the investment climate has materially weakened,” Moody’s said.
According to Dziennik Gazeta Prawna, Morawiecki said that Moody’s decision to raise Poland’s outlook to stable was rational, the risks which the agency noted a year ago when it lowered the outlook not having materialized. He said that Moody’s admitted that Poland’s finances as at the end of 2016 exceeded the agency’s experts’ expectations. And with inflation steady at two per cent and unemployment at 26 year low of 7.7 per cent at the end of April, the economy at least seems in safe hands.
Which is good news. And while in the short term those with political axes to grind may consider that a strong economy insulates them from all criticism, there are still concerns in some quarters about the overall direction of democracy in Poland. The shenanigans over the constitutional tribunal, changes to the way judges are appointed, the effective political control of state owned media, the suggestion that the constitution needs change, without as yet those changes being articulated, and the appearance Nazi style uniformed, banner waving marchers on the streets, leave many with a feeling of unease. All politicians love power and seek to accrue more of it to themselves, but the price of liberty is eternal vigilance. Folk need to remember they hold leasehold interests, not freeholds.