Deflation Continues

Good News Ahead?

Good News Ahead?

According to data from the Central Statistical Office of Poland (GUS), the prices of goods and consumer services fell by 0.2% in December 2015 compared to November 2015. The rate of annual deflation was 0.5%. Deflation is a long-term decrease in the prices of goods and consumer services. In practice, it means that the prices of the products we buy drop month after month, so the purchasing power of money increases i.e. we can buy more for the same price, than in the previous month. Unfortunately, the drop in prices does not include all goods and services. For example, in December 2015, according to GUS, the price of clothing and footwear dropped, but at the same time there was a slight rise in the price of services (by 0.2%). When it comes to our home budget, this continuing decrease in prices is beneficial because we spend less money on a day-to-day basis. It is also a good news for those who do not save money in interest accounts. It is also worth mentioning that long-term negative inflation (deflation) has a negative influence on the economy. Entrepreneurs produce less, prices remain unchanged or fall, profits drop; and companies want to save, rather than invest, which often results in a decrease in the employment rate.
money.pl

Hard Times Ahead for Developers

Housing Future

Housing Future

According to the Central Statistical Office of Poland (GUS), by 2050 every other person living in Poland will be over 50 years old and the population will decrease by 4.5 million. Polish society is aging rapidy, which, in turn, affects the fixed property market. The primary market, currently booming, is expected to be hit particularly hard by these demographic changes. The Rynek Pierwotny website estimates that the demand for home loans will fall by 25-30% within the next 25 years, while the number of transactions on the fixed property market will fall by at least 15%. Andrzej Prajsnar, market analyst for Rynek Pierwotny says: “Demographic changes will certainly be the acid test for developers, as the sector, after experiencing significant growth in the last decade, will feel the drop in demand as soon as in five or six years from now. After 2020, it is to be expected that even more companies will focus their business activity on metropolises, which will make the market even more competitive and will bring about a decrease in profit margins. In such conditions only the most dynamic investors will be able to make a profit.”
nieruchomosci.pb.pl

Spanish Interest in Poland

Spanish-Polish Cooperation

Spanish-Polish Cooperation

Last year’s changes in Polish exports of medicinal products came as a surprise to market experts, manufacturers and industry organisations alike. In the first three quarters of 2014 Spain bought 80% more pharmaceuticals in Poland than in the whole of 2013. According to data of the Central Statistical Office of Poland (GUS), PLN 1.37 billion worth of medicinal products were sold to Spain, positioning the country as the largest importer, well ahead of Germany, which halved its imports of Polish pharmaceuticals. Industry experts and insiders did not expect this change and surmise that since Polish drugs are relatively inexpensive, distributors might buy pharmaceuticals intended for the domestic market and sell them elsewhere in the EU. Another conjecture offered as an explanation is that even though the crisis in Spain is officially over and the country’s economy is recovering, Spaniards might still be curbing their expenses and thus be attracted by the value for money of Polish products. Polish manufacturers have done little to bring about such export dynamics. While Adamed has gained a foothold on the Spanish market, the scale of its operations there is limited. Polpharma, Poland’s largest pharmaceutical company, has monthly sales to Spain averaging approximately PLN 300,000. An expert from IMS Heath, a research company, believes that the Spanish boom may have been triggered by the policies of pharmaceutical multinationals whose Polish plants manufacture for both domestic and global markets. Closing down a few of their production lines dedicated to the German market might have led to a decline in exports to Germany, just as the opening of new ones targeted at other markets might have boosted exports there. Although Spain was one of the hardest-hit economies in the recent crisis, its potential as a trade and investment partner is significant and its share in Polish exports grew at a two-digit rate in 2013 and 2014. Also, having invested almost €10.5 billion, Spain now ranks fifth in foreign direct investments in Poland.
Puls Biznesu

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Unemployment Falls

Bright Future?

Bright Future?

The number of unemployed Poles aged under 25 decreased from 395,000 to 301,000 in the space of one year according to Eurostat. This is a record for the EU and a surprise for economists. Youth unemployment is considered key in assessing a country’s overall economic situation as it is the first indicator to soar in a crisis and the last one to fall when the economy recovers. That was the case in Poland. In 2010, when the ripple effect of the global crisis was felt in the Polish economy, 24% young people were jobless. At the end of 2013 this figure reached almost 27.5%, but after four lean years the unemployment rate in this age group began to drop and did so astonishingly quickly. Total unemployment in Poland also fell last year, from 10% to 8%, marking another EU record. Economists find this unusual, since unemployment only falls so rapidly when GDP growth is around 6% and in 2014 it was only 3.3%. The sharp rise in the number of jobs is a result of the investments of medium-sized and large companies, whose spending on development in 2014 was 16% higher than in the previous year. Governmental programmes designed to reduce youth unemployment also contributed to this improvement. By the summer, the unemployment rate in Poland is expected to drop to 9.7% according to the Central Statistical Office of Poland (GUS) or even to 7% according to Eurostat. The differences result from the diverse methodologies used by the two institutions. While GUS measures the ratio of registered unemployed people to the total number of people with employment contracts, Eurostat takes into account the business activity of the population in general, including work under civil law contracts and in the grey economy. The BAEL methodology used by Eurostat does not focus on the quality of jobs, however, it gives a fuller picture of the market and allows comparisons within the EU.
wyborcza.pl

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Baby Boom in Poland

More Babies in 2014

More Babies in 2014

Despite an overall negative birth rate, the population of Poland has increased by 22,000. According to Poland’s Central Statistical Office (GUS), the number of new births reached 186,900 in the first half of 2014, which is 3% more than in the same period last year. It is the first time since 2010 that GUS has recorded an increase in the number of births, albeit a modest one. It is expected that this tendency will hold for the rest of the year because the number of births has been increasing month on month in 2014. “Perhaps we owe this increase to the fact that many people in their thirties decided that they cannot postpone having children any longer,” says Dr Piotr Szukalski, a demographer from the University of Łódź. 2014 promises to be better than the record low observed last year when only 370,000 children were born. Moreover, GUS reported that the number of deaths has decreased by 7% as compared to 2013. As a result, the overall birth rate was negative in 2013. Despite these figures, the overall population of Poland has increased by 22,000 (0.1%), because more people arrived in Poland from abroad as permanent residents (approx. 23,000) than left the country.
Dziennik.pl

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Over 1M Poles in Grey Zone

In the Shadows (c) fractalenlightenment

In the Shadows (c) fractalenlightenment

Recent information from the Central Statistical Office of Poland (GUS) indicates that in 2011 over 1.4 million Poles earned income from unreported employment. It is estimated that in 2014 this number might even be higher due to an increase in unemployment since 2010. High unemployment rates and bureaucratic employment regulations that are disadvantageous to SMEs are a catalyst for the growth of the grey economy. Employers are afraid of complicated laws and regulations and do not want to pay exorbitant mandatory fees. Therefore, it is not surprising that 13% of Polish GDP comes from unreported employment. “The increased development of the grey economy is understandable, because the grey zone usually flourishes at times of economic decline or crisis,” says Professor Stanisław Gomułka, former Deputy Minister of Finance and Chief Economist at the Business Centre Club (BCC), the largest private employer organisation in Poland. Professor Elżbieta Mączyńska of the Warsaw School of Economics (SGH) claims that SMEs shift towards the grey economy when employment law is inflated; the poorer the employment regulations, the greater the grey zone. Industries with the largest unreported employment include commerce, repair and handyman services, construction, and food and hospitality industries. The grey economy divests billions of złoty from the state budget. The loss to the state economy was estimated at PLN 185 billion last year. However, it is difficult to assess the losses precisely, because some of the funds return to the public purse via VAT charged on purchases made with money earned under the table. Unreported employment destroys the market as employers who pay cash-in-hand have lower costs than entrepreneurs who follow labour law and they also drive down the prices of goods and services. Additionally, people who get paid under the table are not entitled to public health or employment insurance.
Dziennik.pl

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Polish Farmers are Young and Rich

New Generation

New Generation

Ten years after Poland’s accession to the European Union, Polish farmers have become one of the most well-off social groups, according to Dziennik Gazeta Prawna following the results of research by the Central Statistical Office (GUS). Farming households have access to larger sums of money than households of regularly employed persons or entrepreneurs. Last year, the monthly discretionary income of farming households reached PLN 5,044 (after taxes, social insurance contributions and health insurance). This is about PLN 755 more than regular households according to GUS research. In the years 2003-2013, the average discretionary income of farming households increased nominally by 152%. Therefore, it is not surprising that increasingly more farmers are satisfied with their lives. The percentage of farmers who consider their life situation to be good or very good is growing rapidly and has already reached 40%. What is more, Polish farmers are the youngest in the EU; every seventh farmer is not yet 35.
polska.newsweek.pl

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