NBP: Poland to join ERM2 ‘when budget is stable’

Poland should join ERM2 after the excessive deficit procedure launched against it in July 2009 is terminated and the budget is stable president of the National Bank of Poland, Sławomir Skrzypek is quoted as saying by wnp.pl.

The Maastricht convergence criteria set five conditions which have to be met by a country aspiring to join the euro zone i.e. annual inflation rate cannot be higher than 1.5% of EU average, public deficit cannot permanently exceed 3% of GDP and public debt – 60% of GDP, interest rates should not be higher than 2 pp over the average in three EU countries with the most stable prices. In addition a country must function within the ERM2 system for at least two years before adopting to common currency, wnp.pl reports.

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ECONOMIC MONITOR

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• ● In December 2009 and January 2010, as in previous months in the second half of 2009, the Polish economy stood out against other countries in terms of GDP growth. Poland’s economic growth was higher than projected and higher than in other European countries.
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• In 2009 construction output increased by 3.7%.
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• Retail sales increase in most product groups.
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• On the Warsaw Stock Exchange, stock prices were very volatile in January 2010.
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• At the end of December 2009 the registered unemployment rate (claimant count rate) amounted to 11.9% versus 11.4% in November.
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• At the end of January the president signed the 2010 budget bill into law. The bill was adopted by the parliament on December 18.
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• In the fourth quarter of 2009 the Polish economy turned out to be more resistant to the global crisis than had been projected and than the economies of Polish neighbours, something which boosts optimism in forecasts for 2010 and the next years.
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WEEKLY MARKET ANALYSIS

Retail sales up again in June
Retail sales growth in nominal terms accelerated in June to 6.4% y-o-y from 4.3% y-o-y in May. The increase was higher than expected. In real terms, retail sales growth accelerated to 4.5% y-o-y from 2.0% y-o-y. June was a consecutive month with retail sales figures stronger than expected, which indicates that consumption is recovering after it slowed significantly at the beginning of the year. Private consumption is driven by an improvement on the labour market coupled with a rise in disposable incomes. In Q2 2010 retail sales grew by around 3% y-o-y in nominal terms and around 1% y-o-y in real terms. On the basis of retail sales and industrial production data, it can be estimated that the GDP growth rate was close to 3%.

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