Poland Economy
Poland Economy: Waiting for inflation
Despite continuously very high wage growth and strong demand, inflation in Poland remains moderate. Moreover, in August, the consumer price index (CPI) dropped significantly, to 1.5% y-o-y, the lowest level in about a year. Although this decline was, to a large extent, a statistical effect caused by a higher comparative basis, it shows that the inflationary pressure is growing slower than it initially appeared.
Various simultaneous factors contributed to this, including the considerable appreciation of the zloty against the dollar, neutralising the impact of the record high prices of crude oil on world markets upon fuel prices in Poland. Due to strong market competition, enterprises have not transferred increases in the unit labour cost (an effect of worsening relationship between wage growth and labour productivity) to prices of their products. They can support this since they operated on relatively high margins. Resigning from some of this margin, companies can compensate by increasing production.
Of course, this favourable situation may change, and prices may soon accelerate significantly. Meanwhile, the Monetary Policy Council (RPP) did not find sufficient justification for a subsequent increase in interest rates in September. However, further tightening of the monetary policy seems inevitable, and whether it will take place in this year will depend on subsequent economic data and the October inflationary projection.
This year, the RPP raised interest rate three times (in April, June and August), by a total of 75 base points. Currently, the main reference rate in Poland is 4.75%.
Poland Economy: Slight decline of consumer optimism
Consumer confidence in September turned out to be slightly lower than in the previous month. This was caused by impaired assessment of changes in the financial standing of households and changes in the domestic economic situation according to a report on http://www.marketsensus.com/pmr-m-441.html
Poland Economy: Another good month
The latest macroeconomic data demonstrated that the Polish economy is still in a phase of strong growth. This was reflected both in the labour market and in higher incomes of the state budget. Although wages have grown faster than labour productivity for several months, this has not yet posed noticeable inflationary pressure. High level of economic activity should also be maintained in the coming quarters.
Poland Economy: Housing market in Poland still far from equilibrium
After the recent revival on the housing market in Poland and the dramatic rise in house prices experienced in the last two years, there appeared many opinions that the market is overheating and a correction is inevitable in the near future. Such predictions seem to be premature, as even a brief look at the housing market structure reveals a huge structural deficit of dwellings, a sluggish supply side, and big potential demand, which makes me believe that more significant growth in prices is still ahead.
Poland Ecomony: High corporate profits and investment: H1 2007 analysis
Corporate profits and profitability rose significantly in the first half of the year as companies benefited from very robust economic growth. With demand soaring and capacity utilisation at high levels, a substantial part of the profits was earmarked for investment. This should guarantee continued rapid expansion in coming quarters.
The market services sector in Poland: H1 2007 analysis
In the first half of 2007 says  www.Marketsensus.com, the market services sector strengthened visibly, influenced mostly by prosperity in the trade and repairs category. The highest salary growth was noted in financial intermediation, while employment was up the most significantly in trade and repairs. After few years of meagre results, the hotels market should thrive over the next several years, as a result of an inflow of EU funds for the development of tourism, a rise in the number of tourists coming to Poland, and preparations for the EURO 2012 Football Championships.
Looking to the US
In the wake of deteriorating performance of the American economy, September brought about a significant weakening of the US dollar on global markets. The situation in the US also had a bearing on the rate of the zloty, which strengthened against major currencies. Possible deterioration of the economic situation in the US can set off a tidal wave of selling on the Warsaw Stock Exchange. For more information see http://www.marketsensus.com/pmr-m-441.html
Josephine Jenno
Targeted Market Research
www.marketsensus.com
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