Expectations that the March slowdown in production growth would be temporary turned out to be correct because growth in production was again high in April. Construction output is growing fast and measures have been taken to protect the environment against consequences of the accelerated activity in the manufacturing and construction sectors.
Retail sales are also growing fast. Exports and imports have slowed, but only slightly. As expected, inflation has gone up and is projected to grow further in coming months. Consumer prices should start slowing after the 3rd quarter. Employment and wages are still on the rise. Thanks to the favourable economic situation, national budget revenue is high, with a small surplus recorded in the year to April.

The current economic situation can be summarised by the following:
- The economic outlook has improved thanks to the high growth in industrial production in April. This showed that the March slowdown in production growth had been temporary. Growth in the construction and assembly output in April stayed at a high level of the previous two months. Retail sales were also high in April.
- In April CPI inflation was slightly lower than in March. Until the 3rd quarter high prices of oil, other raw materials and food will be pushing inflation up. After the 3rd quarter price growth should slow.
- The March 2008 data on foreign trade and balance of payments, published by the Central Statistical Office (GUS) and National Bank of Poland (NBP) in mid-May, showed that growth in foreign trade slowed as projected. An optimistic signal is that the slowdown was slighter than expected.
- On the labour market, employment growth is still high. Unemployment is on the decrease and wages are growing fast.
- In the 1st quarter, financial results in the commercial sector slightly weakened from the excellent results of last year. Growth in investment was fast.
- As the economic situation was favourable, national budget revenue was on the rise. As a result, in the year to April the implementation of the budget revenue plan was much more advanced than the implementation of the expenditure plan.

Central Statistical Office (GUS): “(...) after the temporary slowdown in March, growth in the main sectors of the economy was quite strong (...)”

GUS: The basic trends in April show that, after the temporary slowdown in March, growth in the main sectors of the economy was quite strong. Unemployment decreased further and the number of jobs increased. Average pensions and wages in the commercial sector continued to rise year on year. In April, the year-on-year increase in prices in the main sectors of the national economy was slightly slower than in previous periods. The enterprises surveyed showed better 1st-quarter results than last year, but basic indices deteriorated because growth in expenditure slightly outpaced growth in revenue. The share of external services costs and wages increased in total expenditure. Spending on new fixed assets continued to grow at a considerably fast pace. (“Information on the Country’s Socio-Economic Situation, GUS, May 27, 2008”; www.stat.gov.pl)

National Bank of Poland (NBP): "The Polish economy is still in a period of strong growth (...)”

NBP (Monetary Policy Council): The Polish economy is still in a period of strong growth encompassing all its sectors. Data obtained since the Council’s last meeting indicate that the economic growth rate is still high, though it may decrease somewhat in the next quarters (...) The Council’s assessment is that the latest macroeconomic data suggest that in the first half of 2008 the economic growth rate will probably still be higher than the rate of growth in potential GDP. (“Report from the Monetary Policy Council Meeting on May 27 and 28, 2008”; www.nbp.pl)

Assessments from economic institutes and independent experts

Institute of Economics Polish Academy of Sciences (INE PAN): (...) after three years of accelerating economic growth, signs of a slowdown have started to appear, but the GDP growth rate will still be relatively high. (...) Domestic demand will continue to be the main factor behind economic growth. It will be increasing faster than GDP (...). Economic growth will also be driven by individual consumption and investment. Individual consumption will rise by around 5%, thanks to the favourable situation on the labour market and a rise in incomes due to the indexation of old-age and disability pensions and a reduction in the disability contribution under the obligatory social insurance scheme. Investment will increase by around 18%. Investment growth will be driven by the fast increase in domestic demand, shortage of production capacity, housing boom and inflow of EU funds. (INE PAN report no. 12, “Polish Economy. Projections and Opinions,” May 2008; www.czse.com.pl)

Centre for Social and Economic Research (CASE): The 1st quarter of 2008 was marked by positive surprises in the economy, which so far has been very resistant to stagflation and the world’s financial crisis; the Polish banks’ exposure to the American market is slight. Contrary to our expectations, the growth trend above 6% was sustained. Economic expansion was due to domestic demand, which was pushed up by the high growth rate in consumption and investment in fixed assets. (CASE report, May 2008, “Trends. Analyses. Forecasts”)

Economic Development Institute Warsaw School of Commerce (IRG SGH): The economic slowdown was noted not only in industry and construction, but also in transport and trade (...). The slowdown was caused first of all by the weakening of economic conditions in manufacturing, construction and transport. The increase in the barometer was smaller than expected, with most of the effect attributable to a deterioration in the transport sector. (...) It was the worst deterioration in economic conditions in this sector since 2000. (...) A slowdown in economic activity in the industrial sector has been seen since the middle of last year. (...) Also in construction, economic conditions have been worsening since last year. The construction outlook worsened for a fourth time running. (...) The climate in the retail sector also deteriorated slightly. (...) The climate improved in agriculture and the banking sector. The outlook on the situation of households was similar to last year’s. (...) In successive months, we will be seeing stronger economic activity due to seasonal factors, which will be translated into an improved economic climate, especially in construction, transport, the banking sector and agriculture. One can also expect an improvement in the situation of households. The seasonal revival will not have much impact on the situation in the manufacturing and retail sector. But one can expect that any possible increases in outlook indices will be smaller than last year. As a result, the IRG SGH barometer will be lower. On the basis of the trends to date, we project that in 2008 the barometer will reach the highest value in the 3rd quarter. But the figure will be lower than a year before. (Study by Prof. Elżbieta Adamowicz and Joanna Klimkowska, PhD, www.pte.pl)

Prof. Władysław Welfe, University of Łódź: The high economic growth rates exceeding 6% showed a downward trend in the final quarters of 2007. We expect that the rates will still be falling, although high growth of up to 5.5% will continue throughout 2008. Then, it will decrease further to 4.5% in 2009. Another revival is expected since 2010. This is connected with a new growth impulse associated with the absorption of EU assistance funds and organisation of the European football championship in 2012. As a result, in the years 2010-2012 economic growth will accelerate again to around 5.5%. (...) As spare production capacity has dwindled in many sectors of the economy, there is hope that high growth rates of up to 15% in fixed asset investment will continue in 2008. After a fall in investment growth to 11% in 2009, investment is expected to rebound in the years 2010-2012 due to infrastructure projects and the inflow of more foreign investment. (See: Experts’ commentaries published on www.pte.pl. The commentaries of NRK experts have been published by the “Nasz Rynek Kapitałowy” monthly, no. 3/2007, no. 7-8/2007, no. 10/2007, no. 12/2007, no. 3/2008 and no. 6/2008. This quotation is from a commentary to be published in no. 6/2008 of the monthly)

Central Statistical Office (GUS): According to the preliminary estimate, in the 1st quarter of 2008 real GDP rose by 6.1% year on year. In the 1st quarter domestic demand grew at a slightly faster pace than GDP - 6.3%. The contribution of investment demand to GDP growth weakened to 2.2 percentage points from 3.0 points in the 1st quarter last year. The same trend affected individual consumption - 3.7 percentage points versus 4.5 points in the 1st quarter last year. The contribution of foreign demand (net exports) to economic growth was still negative at -0.4 percentage points. (...) In the 1st quarter Gross Value Added for the national economy rose by 5.5%. Gross Value Added for the industrial sector rose by 6.9% and for construction by 16.7%. In the services sector, Gross Value Added was higher by 6.7% compared to the 1st quarter of 2007; in trade and repairs it was higher by 12.0% and in transport, warehousing and communications higher by 4.7%. In the 1st quarter domestic demand was higher by 6.3% compared to the 1st quarter of last year, with GDP growth at 6.1%. Total consumption rose by 4.1%, with individual consumption up by 5.6% and public consumption down by 1.1%. Gross fixed capital formation was higher by 15.7% year on year. The investment rate, or the ratio of gross fixed capital formation to GDP in current prices, was 15.4%. (GUS report, May 30, 2008; www.stat.gov.pl)

GDP growth projections for 2008 have been revised down, but are still optimistic.

Compared to other countries, the Polish economy is still growing at a relatively fast rate and inflation is still lower than in most new EU member states.