Ronald Reagan said that the government’s view of the economy could be summed up in a few short phrases: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Which seems to be a fair summary, in Poland as elsewhere. Fortunately, it seems that there is increasing movement in the Polish economy with some encouraging data suggesting positive prospects.
According to figures released today by Poland’s central statistical office, GDP grew by 3.3 per cent in 2014, up from 1.7 per cent in 2013. The rate of unemployment in December was 11.5 per cent, a welcome drop from 13 per cent in December 2013. Of course, this still translates into 1.82 million folk officially unemployed, which a burden for those affected. Nevertheless, Poland’s performance to date does provide a sound basis for the positive predictions for 2015.
The World Bank predicts that Central Europe will expand output by 2.7 per cent this year with Poland’s GDP expanding by 3.2 per cent, compared to the Finance Ministry’s prediction of 3.4 per cent, and an estimate of Euro zone growth of just 1.1 per cent. But, as Artur Radziwiłł, Poland’s Deputy Finance Minister, noted at the press conference with the World Bank, disappointing Eurozone growth and unemployment figures are a cause for concern in Poland.
Elsewhere, the good news continues with Bank Zachodni WBK forecasting rises in Polish exports of between six and seven per cent compared to 2014. Needless to say, the forecast assumes improved economic growth in Germany during 2015, a country which accounts for a quarter of Polish exports, and that the exchange rate remains at around the export friendly PLN 4.21 to the Euro. Poland’s comparatively lower labour costs are still seen as key to Poland’s being able to offer good quality products at low prices, and the penetration of new markets, particularly in the Middle East and Asia, is expected to boost exports. Let’s hope so, since some estimates predict that up to three quarters of Poland’s GDP growth this year will be export driven.
And speaking of driving, Poland has been one of the countries to complain to the European Commission about the German government’s decision to apply the minimum wage of EUR 8.50 an hour to all truck drivers who are involved in transit trade through Germany. Foreign employers risk a fine of more than EUR 30,000 if they fail to comply. The Polish minimum wage for 2015 is PLN 1,750 gross a month (EUR 400) and Poland fears that enforcing German wage rates would weaken its trucking industry, which now plays a major part in trans-European trade.
However, the news from the transport world is not all bad with construction work to begin shortly to double capacity at Poland’s largest container terminal in Gdańsk. The terminal’s capacity will increase from 1.5 million TEU (twenty-foot equivalent units) to 3 million TEU after the first phase of investment, with the possibility of a further increase in capacity if needed. In 2104 the terminal handled 1.2 million TEU, close to capacity and research suggests that demand for container shipping to and from Poland will rise by 160 percent over the next decade.
All in all, it seems that Poland is well placed for the immediate future. As ever, and as mentioned here in Forecast, every silver lining comes wrapped inside a cloud. The effect of the ECB’s decision to embark on programme of quantitative easing (QE) is unclear. On the one hand Der Spiegel quoted unnamed sources close to Germany’s Finance Ministry that countries on the outskirts of the euro zone – particularly the Danish Krone and the Polish Zloty – could have economic troubles, while on the other different commentators suggest that QE is unlikely to have major effect and that, in the long run, QE should support the Złoty against the Euro, as it should revive the Euro zone economies. But, as Keynes remarked, in the long run we are all dead. There also remains the danger that further problems in Russia and Ukraine, such as a weakening of demand in those countries or more sanctions, could undermine economists’ predictions and who knows what might happen as Greece’s new government grapples with the EU over its indebtedness.
But let’s end with Ronald Reagan on a positive note: “There are no great limits to growth because there are no limits of human intelligence, imagination, and wonder.”