Domestic demand continued to be the principal factor standing behind the high GNP growth rate in 2007. The GNP growth was caused in almost 50% by gross outlays on fixed assets; an evident growth in their contribution to the GNP was already observed in 2006. The real growth rate of gross added value was also high, estimated at 6.6% for all 2007, compared with 6.0% in 2006 and a bare 3.3% in 2005. The substantial rise of construction’s contribution to the gross added value (around 40%) noted in the I quarter of 2007, systematically fell in successive months and stood at only 8.8% at the end of the year (in the IV quarter). Though added value is still the greatest in construction, the present difference between it and the added value in industry (7.9%) and services (6.9%) has become small.

In 2007 Polish enterprises registered even better financial performance than in the previous year. Generated profits amounted to 97,280.5 mln PLN, that is almost 20,000 mln PLN more than in 2006. The real growth rate of revenue exceeded 14.5%, while the growth rate of costs stood at 14.1%. That means costs were increasing slower than revenue, due to which the level of costs in production companies fell from 94.2 in 2006 to 93.8 in 2007. Profitability of sales by the majority of companies also improved (5.7% over the year). Profitability improvement was also influenced by the increased contribution of costs of external services in the structure of costs (by 0.7 pct. points) which reveals that unit costs were transferred to external contractors. Financial operations deserve special attention since for the first time in five years their performance was not negative in 2006. and continued to rise in 2007. The good economic health enjoyed by Polish companies gave rise to an increased number of businesses operating on the market, rising from 3,636,039 to 3,685,608. That was largely caused by a sudden slump in the number of businesses which terminated operating.

Table 5.1. Financial situation of production companies – selected results and economic indexes

Item 2005 2006 2007
in mln PLN

Overall revenue 1314630.6 1497784.6 1716627.8
Costs of gaining reven-
ue from overall activity 1250067.3 1445459.1 1610061.7
Gross financial
performance 64963.8 86339.3 106641.0
Net financial
performance 51409.7 69796.8 88056.5
Net profit 62108.5 77898.8 97280.5
Name of index W%
Index of costs 95.1 94.2 93.8
Profitability index 5.3 5.5 5.7
Turnover prof. index 3.9 4.7 5.1
Turnover prof. index 4.9 5.8 6.2
I degree liquidity index 31,9 35,1 33.8
II degree liquidity index 97.3 101.0 99.0
(Source: Central Statistical Office)

Not all indexes can arouse such optimism. The excessively high value of I degree liquidity index has fallen from 35.1% in 2006 to 33.8% in 2007 but that reduction is unsatisfactory in relation to the recommended figure of 20%. The rising number of businesses where I degree liquidity index exceeds the recommended figure must also give cause for concern. In 2007 such businesses accounted for 46% of the total, i.e. 1.3% more than in 2006. The value of stocks (materials, semi-products and finished products as well as goods) has been increasing for a year, their rotation cycle in the IV quarter of 2007 lengthening from 30 to 32 days. Luckily, the rate of stocks increase slowed down slightly – by o.6 pct – in the IV quarter of 2007. Cycles of receivables and liabilities are also not deteriorating, while the present healthy state of the economy is allowing companies to safely finance increased stocks. Insufficient labour and increased wage demands are also being faced by companies, with every second company in Poland experiencing recruitment problems. The large number of vacancies, especially for persons with basic professional qualifications (accounting for 51.8 of vacancies following the II quarter of 2007) speaks of problems being encountered on the labour market. The major cause is the mass emigration for better-paid jobs by Polish workers, though the situation should gradually improve due to saturation of foreign labour markets and strengthening of the Polish currency in relation to other currencies. Rising wages in Poland are also reducing the attraction of finding jobs abroad.
Magdalena Olender-Skórek