Polish GDP Grows at Fastest Pace Since 2008 on Investments
January 27, 2012, 6:45 AM ESTBy Katya Andrusz and Dorota Bartyzel
(Updates with comments from central bankers in fourth, sixth paragraphs, analyst in ninth, bonds in 10th.)
Jan. 27 (Bloomberg) -- Poland’s economy expanded at the quickest pace in three years in 2011 as companies boosted investment and a weakening zloty buoyed exports.
Gross domestic product rose 4.3 percent from a year earlier, compared with a revised 3.9 percent in 2010, the Central Statistical Office in Warsaw said today. The median estimate of 27 economists surveyed by Bloomberg was 4.2 percent. The annual pace was the fastest since the economy grew 5.1 percent in 2008.
Poland’s economy, the largest of the European Union’s eastern states, was the only one in the 27-nation bloc to avoid a recession in 2009. EU funds improved infrastructure and modernized production, while a weaker zloty kept exports growing even as the euro area’s debt crisis damped demand in the country’s most important markets, including Germany.
“This is a very good result,” Anna Zielinska-Glebocka of the central bank’s Monetary Policy Council said in an interview on TVN CNBC. “Let’s hope the performance can be sustained this year.”
The zloty dropped 11.2 percent against the euro last year, the fifth-worst performance among more than 20 emerging-market currencies tracked by Bloomberg. The currency appreciated as much as 0.4 percent to 4.2143 per euro, its strongest in 4 1/2 months, before paring gains to 0.3 percent at 4.2184 by 10:46 a.m. in Warsaw. It has advanced 2.2 percent this week and 5.9 percent since the end of last year.
Central bank Governor Marek Belka is “more optimistic than most” analysts about economic-growth prospects for this year and said in an interview today with Bloomberg TV in Davos that he expects the economy to expand by more than 3 percent.
Investments Quicken
Fixed-investment grew 8.7 percent in 2011, compared with a 0.2 percent decline a year earlier, while private-consumption growth slowed to 3.1 percent from 3.2 percent, the statistical office said.
The euro-area economy probably grew by 1.5 percent last year, while the Italian economy may have expanded only 0.5 percent, according to European Commission forecasts published on Nov. 11. The Polish result was 0.3 percentage point higher than the commission’s outlook and would lag behind only Latvia, Lithuania and Estonia in the EU if the forecasts hold.
Rating Upgrade
Poland “deserves” a rating upgrade because growth is bolstering investor confidence, said Krzysztof Kalicki, the chief executive of Deutsche Bank AG’s local unit, in an interview yesterday.
“It makes perfect sense to expect a rating upgrade for Poland,” Kalicki said. “I don’t want to say there are no challenges facing the Polish economy, but they are incomparable to what’s going on elsewhere in Europe. Poland definitely deserves an upgrade after all the work it has done since 1989.”
Poland is rated A2 by Moody’s Investors Service, the sixth- highest grade and on par with Italy. Standard & Poor’s and Fitch Ratings both have Poland at A-, the seventh-highest grade.
The extra yield that investors demand to hold Polish 10- year bonds over German same-maturity debt fell to 373 basis points at 12:02 p.m. in Warsaw, from 408 basis points on Jan. 5.
Exports rose 13 percent to 12.5 billion euros ($16.4 billion) in November from a year earlier, according to the latest foreign trade figures from the statistical office.
Investment Recovery
“Consumption has weakened for households and corporates, but investment has recovered pretty strongly,” Raffaella Tenconi, an economist at Bank of America Merrill Lynch in London, said in a Jan. 20 interview. “This seems partly to be because the public sector wanted to be forward looking and anticipated a fiscal crisis that in the event never happened. Also, the German economy is doing better than we expected.”
Poland’s government is “very pleased” with today’s GDP estimate, Prime Minister Donald Tusk told reporters today in Warsaw. The figure shows the country is coping “decently” with spillover from the euro area’s debt crisis, Tusk said.
The budget gap probably narrowed to 5.6 percent of GDP last year from 7.8 percent in 2010, according to government estimates.
--With assistance from Barbara Sladkowska in Warsaw. Editors: Balazs Penz, Alan Crosby, David McQuaid
To contact the reporters on this story: Katya Andrusz at kandrusz@bloomberg.net Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net
To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net
