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PL
Gross Domestic Product
The GDP growth in 2016 amounted to 2.8%. Domestic demand remained the most important driver of growth.
The GDP growth in 2016 amounted to 2.8%. Domestic demand remained the most important driver of growth.
A much-better-than-expected labor market situation and a significant increase in real household income led to the acceleration of household consumption growth to 3.6%, compared with 3.2% in 2015. The rate of the public consumption growth was also higher than in 2015. However, the investments fell in the same period by 5.5%. This decrease concerned mostly public investments – including investments of local governments. It was connected with the reduction of investments co-funded with the EU, as a result of the end of the previous EU financial perspective and prolonged waiting for the disbursement of funds under the new financial perspective. Large companies whose shares are held by the State Treasury or companies controlled by local governments also contributed to the decrease in investments (energy, public services). The investment growth rate of other companies also decreased, which was influenced by uncertainty regarding future economic conditions or regulations. The impact of inventories and net exports on the GDP growth in 2016 was positive, although only slightly so in the case of the latter.
GDP growth decomposition in 2012-2016
The labor market and consumption
The situation on the labor market improved significantly in 2016. The registered unemployment rate fell to the lowest level since mid-1991 and amounted to 8.3% at the end of December. It is 1.4 p.p. lower than the year before. According to LFS1, the unemployment rate declined in the fourth quarter to 5.5% year-on-year, while the seasonally adjusted unemployment rate according to EU statistics amounted to 5.9% in December 2016, which gave Poland the ninth place among the European Union Member States (the EU average is 8.2%).
The number of persons employed in the national economy in the first three quarters of 2016 increased by 198 thousand people compared with the corresponding period of the previous year (2.4% year-on-year). On the other hand, the growth rate of average employment in the enterprise sector stabilized in the last months of 2016 – it amounted to 3.1% year-on-year in December. The number of employed persons increased also according to the LFS statistics. At the same time, the number of people employed on the basis of employment contracts also grew. The latest economic climate surveys confirm
that labor demand has not decreased. However, there are growing problems with finding suitable candidates – adverse demographic trends contribute to a reduction in the number of working age people. According to the Central Statistical Office (CSO), at the end of the third quarter of 2016, the number of vacancies in entities employing at least 1 person (95.5 thousand people) was higher by as much as 30.5% compared with the corresponding quarter of 2015. According to the Quick Monitoring Survey conducted by the National Bank of Poland (NBP), almost a third of all respondents reported open vacancies at the end of the third quarter. More than a third of all enterprises reported having problems finding employees.
Despite the improvement on the labor market, there was no visible increase of the nominal growth of remuneration in 2016, although surveys from the turn of the year indicate higher remuneration pressure. The average monthly remuneration in the national economy increased by 3.6%, and in the enterprise sector alone by 3.8%.
The financial situation of households improved greatly in 2016, which was, to a large extent, due to the funds from the “Family 500+” program, which started to be distributed in the second quarter. The real growth of the remuneration fund in enterprises was the highest in 8 years (7.7%). In the face of growing employment security and the growth in real income, the consumer confidence indicator published by the CSO reached at the end of 2016 a level similar to the record level from 9 years ago.
In such conditions, in the third quarter of 2016, the seasonally adjusted quarterly growth of household consumption was the biggest in the recent years (+1.4% quarter-on-quarter). The annual consumption dynamics rose to 3.9% year-on-year from the 3.3% year-on-year in the second quarter of 2016. In the fourth quarter consumption dynamics increased up to 4.2% year-on-year basis. Consumption increased by 3.6% throughout 2016.
Inflation, monetary policy, and interest rates
2016 was another year of falling consumer prices (CPI) annual average fell by 0.6%, compared with the 0.9% decrease in 2015. Deflation (year-on-year) began to decline in the last months of the year to finally fade completely in November. In December, the inflation rate amounted to 0.8% year-on-year.
The annual average decline in prices in 2016 happened mainly due to the very low prices of fuels and energy. However, the net inflation rate also declined (-0.2% – CPI excluding the prices of food and energy), indicating the lack of inflationary pressure in the face of a negative output gap, moderate average nominal remuneration dynamics, and weak growth in prices abroad. However, at the end of the year, the annual dynamics of consumer prices began to grow, which was caused by an increase in global fuel prices (as well as food prices in November and December), with the prices being lower and decreasing in the previous year.
The Monetary Policy Council did not change interest rates in 2016 and January 2017. They remained at the level established in March 2015 – the reference rate is currently 1.5%. According to the Monetary Policy Council, the current level of interest rates is conducive to keeping Polish economy on the path of sustainable growth and preserving its macroeconomic stability.
Public finance
According to initial estimates, the state budget deficit for 2016 was approximately PLN 46.3 billion, which is considerably less than the planned PLN 54.7 billion. The Ministry of Finance estimated initially that the public finance sector deficit in 2016 amounted to 2.8–2.9% of GDP. Poland had no problems in obtaining debt financing – approximately 26% of borrowing needs planned for 2017 have already been financed at the end of 2016.
1 LFS (Labor Force Survey) – a survey of the labor market situation conducted every quarter by the Central Statistical Office.
