The Polish Economy in 2009
Few European countries can count 2009 as a good year financially, and yet its seems Poland fared better than most through the rough patches of the global financial crisis. Poland was the only European Union country to see positive growth in all quarters of 2009, starting with 0.8 percent in Q1, 1.1 percent in Q2, and 1.7 percent in Q3, with an average projected growth of 1.1 percent. Big steps towards the privatisation of some of the nation’s largest assets were taken, including the Warsaw Stock Exchange and the shipyards. Most significantly, the Polish government has revised its strategy for adopting the euro, moving the target date forward to 2015 from its original goal of 2012. But while many industries still suffered in relation to pre-crisis levels, overall the outlook has been optimistic heading into 2010.
Below, we take you on a month by month journey through the highs and lows of the Polish economy in 2009.
A contraction of 0.2 percent in Q4 of 2008 is announced. Poland’s central bank lowers its key interest rate by .75 percent as a result.
In the second half of February the Polish złoty slid to its lowest level in five years, weaker than the Hungarian forint and Czech crown, and even the Ukrainian hryvnia. In comparison, the euro rate hovered around 4.9 złotys, the American dollar cost 3.9 złotys and the value of Swiss francs rose to 3.3 złotys. Since almost 60 percent of home loans are denominated in Swiss francs, the debt of almost a million Polish households increased. However, the Polish government maintained its intention to adopt the euro in Poland in 2012.
The Central Statistical Office (GUS) announces that the country’s annual output has dropped 14.3 percent, but is up 2.7 percent month on month.
The Polish central bank cuts interests rates to a record low of 3.75 percent due to concerns over the stagnation of the economy.
The Ministry of Regional Development prepared an anti-crisis package to accelerate and facilitate the spending of EU funds – the €67 billion granted to Poland from the European Union for the period 2007-2013, available for entrepreneurs, self-governments and non-governmental institutions.
The International Monetary Fund granted Poland a $20 billion “precautionary” credit designed to boost confidence in the country’s economic policy. The Flexible Credit Line is to guarantee, not necessarily lend, credit in times of need, so that the beneficiary can hold the credit in reserve and use it only if required. The approval of the credit is based on various economic indicators and as such shows the strength of the economic fundamentals of the applying country.
Eurostat rates Poland as the fourth poorest country in the EU when ranked by GDP per person, standing at 57 percent of the EU average.
As GM filed for Chapter 11 bankruptcy in the U.S., it struggled to reach a deal with the German government to decide the fate of its European branch, Opel, which has a Polish plant in Gliwice.
The Organization for Economic Cooperation and Development (OECD) predicated a 6.2 percent budget deficit for Poland for 2009 – twice the figure allowed by EU standards for entry into the eurozone.
The European Commission forecasts Poland’s budget gap to be 6.6 percent of the GDP in 2009, and over seven percent for 2010, forcing the Finance Ministry to call for a revision in the year’s budget. A drop in tax income (204 billion złoty instead of the planned 251 billion) along with a decrease in individual consumption are to blame. The revisions include expense cuts and finding additional sources of income. A change in the financing of road construction projects will provide almost half of the expenses cuts. Opinion polls show that the public is not happy with the way the government is dealing with the current economic situation.
The European Commission accepts the rescue plan of the Gdańsk shipyards, but the Gdynia and Szczecin yards, not approved for EU aid, are sold to a private buyer, QInvest, which delays the promised payments.
New forecasts indicate that Poland will be able to emerge from its slump sometime in early 2010. The government forecasts a GDP growth of 1.0 percent in 2009, but the IMF only forecasts a growth of about 0.7 percent.
The government announces an updated privatisation programme for the years 2008-2010. The revision of the programme is induced by a growing budget deficit due to the global financial crisis. 15 companies are to be privatised by the end of 2009.
After QInvest fails to pay for the Szczecin and Gdynia shipyards, they are once again open to offers from private investors.
Poland regains control over insurance giant PZU after a deal is struck with Dutch company Eureko.
A spokesperson for the National Bank of Poland’s Monetary Policy Council announces that Poland will probably not adopt the euro before 2014 or 2015.
The European Commission doubles its previous forecast of 0.8 percent for Poland’s GDP growth for 2010 to 1.6 percent, while the GUS announces that industrial output has decreased by only 1.3 percent year on year – only half of what was previously predicted.
Privatisation of the Warsaw Stock Exchange begins. Before the end of the year, 15 companies are to go private, and the Polish government plans to sell a stake of between 51 percent and 73.8 percent in the first stage of the WSE privatisation and another 25 percent in two to three years.
The World Bank ranks Poland as 151st out of 183 countries in terms of ease of paying taxes in its Paying Taxes 2010 indicator. The report states that Polish companies spend an average of 395 hours (that’s 16 and a half days) on their accounting per year. Companies have to pay 40 different taxes on average, which consume about 40 percent of the business’s profits.
Takeover of Polish coffee chain Coffeeheaven by Costa Coffee, owned by Whitbread, is announced.
Polish online retailers announce their best year yet in terms of sales.
The Polish Information and Foreign Investment Agency (PAIiIZ) reveals the largest foreign direst investment (FDI) projects for 2009, and topping the list is a Cargotec plant valued at over 368.2 million złoty and located in Stargard Szczeciński in the northwestern part of the country.
Prime Minister Donald Tusk states that 2015 is a realistic date for Poland to enter the eurozone.