A drop in economic growth

4th June 2010

© Asia Kortas Economic growth has dropped Share:

Poland’s economic growth rate dropped in the first quarter owing to the effects of the harshest winter since 1979.

Figures released by the Central Statistics Office (GUS) showed that the economy grew by 0.5 percent in the first three months of the year compared to the 1.1 percent seen in the final quarter of 2009.

Although lower, the growth rate matched the broad expectations of economists, who attributed the drop to the influence of the cold and bitter winter. Freezing temperatures brought construction to a halt and delayed large infrastructure projects, regarded as vital for keeping the Polish economy ticking over.

GDP growth also suffered from winter chills, dropping from the 3.3 percent seen in the final quarter last year to 3.1 percent.

The poor weather also had a bad effect on investment levels for the start of the year. First quarter GUS figures for fixed investment recorded a 12.4 percent drop on the 1.1 percent growth rate seen at the end of 2009.

Along with the cold, economists also pointed the finger of blame at banks for the drops. With the financial institutions employing a more restrictive lending regime, firms were deterred from seeking loans so curbing expansion and putting downward pressure on consumer confidence.

But on a more positive note, an OECD report said that Polish GDP growth for 2010 should come in at 3.1 percent, rising to 3.9 percent in 2011.

The report cites infrastructure projects connected with EU funding and preparations for the 2012 European football championship, which Poland is co-hosting with Ukraine, as the main economic drivers for GDP growth.