Poland developed at its fastest rate in 6 years informs the Central Statistical Office. In the last quarter, investments finally began, allowing us to look at the current year with optimism. “The Central Statistical Office also published a publication on the socio-economic situation of the country, which is not so clearly optimistic,” writes Marcin Lipka, Conotoxia senior analyst.
Let’s start with good news
Positive #1: Investments
The fastest economic growth since 2011 makes us happy. However, apart from the development at the level of 4.6% last year, the information that investments have finally accelerated is far more important. For three quarters, their contribution to GDP was marginal and amounted to approximately 0.3%. Throughout the year (no detailed data for the fourth quarter available yet), the investment contribution increased to 1%.
This means that in the fourth quarter alone, the investments could have increased by about 13 billion PLN, while in the previous three quarters, increased by about 5 billion PLN in total. An increasing gross fixed capital formation is a signal that economic activity may also be good in the subsequent quarters.
Positive #2: Export
The specifics of the developing country's economy, Poland, usually causes the abroad trade balance to be visibly worse with growing economic activity (strong consumption, rising investments). GUS estimates, however, show that the net export contribution in 2017 was positive, which means that this deterioration did not take place. It can not be ruled out that this is a result of a better condition and competitive position of Polish services export. These are already a quarter of the exports and creates a surplus of 75 billion PLN (an increase of 16 billion PLN for the period from December 2016 to November 2017 - NBP data).
Positive #3: Employment sharply up
According to preliminary data included in the study of the Central Statistical Office entitled, ‘Information on a country’s socio-economic situation in 2017’ [hereinafter: ‘The Study’], employment in the national economy last year increased to 15.72 million people, which is by approx. 430 thousand. In total, for two years, the number of jobs in Poland has increased by over 900,000, which should be considered as very optimistic information.
Positive #4: Women live longer
According to the data provided in ‘The Study’, the median age of mortality in 2016 was 77 years, while only 16 years earlier it was 73 years. Life expectancy has increased significantly among women. who live 4 years longer at 82 years average.
Negative #1: Men's life expectancy is practically unchanged
Unfortunately, the lifespan of men has remained virtually unchanged over the last 16 years. According to ‘The Study’, the average age of male mortality in 2016 was 70 years, and is only a year more than it was at the beginning of the new millennium.
Negative #2: Increase in food prices
Food prices throughout 2017 increased by 4.2% compared to last year. This is over five times faster than the year prior. The average annual price of butter increased by 31%, fruit by 8%, yoghurt by 7.3%, and pork by 8.6%. Considering the increase in wages, in most cases the purchasing power of working consumers has not deteriorated in the context of food purchases.
Negative #3: Low increase in pensions
The data included in ‘The Study’ shows that the average increase in pensions from the non-agricultural social security system last year was 2.5%. This is slightly above the general inflation level (2.0%) which does not correspond exactly to the so-called retiree or pensioner's shopping basket. In the case of food purchases, the purchasing power of retirees and pensioners decreased by approximately 1.7%.
The situation was even worse in the case of individual farmers. Their pensions increased only by 1.5% on average, which means that even taking generally accepted inflation into account, the purchasing power of these beneficiaries decreased over the last year.
Negative #4: 237 thousand more pensioners
Demographic processes are unrelenting and the number of pensioners in Poland will grow. However, the fourth quarter of last year was special. The lowering of the retirement age resulted in 237,000 new pensioners in one quarter alone. There are already 9,126,000 pensioners. For the purpose of comparison, the number of beneficiaries increased by only 4,000 between the first quarter of 2016 and the third quarter of 2017 according to the ‘The Study’ of the Central Statistical Office.