Poland's economic situation

For many years, Poland belonged to the group of countries with stable economic growth, which in the case of this country was faster than the European Union average; in the years 2016-2019, Poland’s average annual growth rate of GDP stood at 4.5%, whereas in the whole EU, it was 2.1%. This situation changed in 2020, when due to Covid-19 pandemic Poland saw the first fall in GDP since the economic transformation. The economy declined by 2.7% compared to 2019, which nevertheless was one of the best results in the EU, where the average fall in GDP amounted to approximately 6%.

Poland’s real GDP in 2020 was about 16% higher than in 2015. Consumption, the most important factor affecting the dynamics of the economic growth, likewise increased by 16% in 2020 compared to 2015. Households’ consumption grew less in that period (by about 15%) than the public consumption (by over 20%). This was the result of changes observable in 2020, when consumption in the households’ sector slowed down and at the same time continued to grow in the public sector. Gross capital formation, shaped by changing trends in consecutive years, exceeded that year the level from 2015 by nearly 2%, this including an increase in gross fixed capital formation by 0.3%. Investment rate fell in the same period: from slightly over 20% in 2015 to approximately 17% in 2020.

Until 2019, a growth in both exports and imports of goods and services was observed (in 2020, there was a slight fall in both of them year on year). The value of exports was greater than that of imports, and also grew faster than the latter. As a result, the share of foreign demand in the Polish GDP increased: from approximately 3% in 2015 to nearly 7% in 2020.

In the period 2015-2019, there was a gradual stabilization of public finance in Poland. The deficit of the general government sector decreased from -2.6% of GDP to -0.7% of GDP, and the debt of this sector shrank from 51% to 46% of GDP. Poland at that time belonged to a group of EU countries which met the budgetary criteria determined by the EU Stability and Growth Pact (the maximum level of the deficit of the general government at 3% of GDP, and the maximum debt of this sector at 60% of GDP). However, in 2020, as a consequence of the pandemic, the situation of public finance in Poland worsened. The deficit of the general government grew to 7% of GDP (the same as the average for the whole EU) and exceeded the level permitted by the European Commission for the first time since 2014. The debt of the general government, on the other hand, increased to almost 58% of GDP, which was still within the boundaries set by the European Commission and additionally much lower than the EU average (approximately 91%).

Labour market. Wages, salaries and social benefits

In the period 2015-2019, favourable trends, i.e. increasing employment and a declining unemployment rate, prevailed on the Polish labour market. Therefore, despite negative changes resulting from the Covid-19 pandemic, the situation on the labour market in 2020 was better than in 2015. The number of employed persons in the national economy was almost 7% higher than at the end of 2015, and the registered unemployment rate stood at approximately 6%, whereas in December 2015, it was nearly 10%.

Wages and salaries grew every year in 2015-2020, but in 2020 slower than in previous periods. From 2015 to 2020, the average monthly (nominal) gross wages and salaries in the national economy grew by 32% (to nearly PLN 5,170 in 2020), and its purchasing power increased by 22%. Retirement and other pensions also grew, although not as much as wages and salaries. The average nominal gross benefit from the non-agricultural system of social security was almost 20% higher than in 2015, and its purchasing power was over 8% higher. However, the value of the above- mentioned benefits in relation to wages and salaries slightly decreased: in 2015, it was over 52% of the average salary in the national economy, and in 2020, it was less than 48%.

The purchasing power of wages and salaries as well as retirement and other pensions was affected by inflation phenomena, with a varied impact and intensity throughout 2015-2020. The years 2015-2016 were marked by a slight fall in the prices of consumer goods and services, however, since 2017, there has been a continuous price increase. In 2019, consumer prices in Poland started to grow, to become the fastest-growing prices in the whole EU in 2020. Consequently, the prices of consumer goods and services in 2020 were 9% higher than in 2015, this including considerable hikes in the prices of food and non-alcoholic beverages (by 18%), and accommodation-related goods and services (by 13%). Transport-connected prices, on the other hand, slightly decreased (by 2%) in the same period. Inflation affected the households of retirees and pensioners to a larger extent than the households of employees or the self-employed. Consumer prices for the former increased by 11% in 2015-2020, whereas the latter had to pay less than 9% more for the purchased goods and services in the same period.

Regional differences in GDP

The economic growth rate varied across Polish voivodships. The fastest-developing part of Poland was Mazowieckie voivodship, whose GDP increased by approximately 17% in 2015-2018, compared to the Polish average of 14%. This was mostly thanks to high dynamics of the economic growth in Warszawski stołeczny region, where GDP grew by over 19% (and by less than 11% in the rest of the voivodship). GDP grew the slowest in Mazursko-warmińskie and Lubelskie voivodships (by less than 10%).

As a result of varying dynamics of economic growth in Poland, the gap between the above-mentioned wealthiest voivodship and the two poorest ones slightly increased in 2015-2018. Mazowieckie clearly outperformed other voivodships in terms of GDP per capita, which in 2018 reached 160% of the average for the whole country, and which marked a slight improvement compared to around 159% in 2015. This result was possible thanks to high GDP per capita in Warszawski stołeczny region (over twice as high as the average for the whole Poland; GDP per capita in the rest of Mazowieckie voivodship was lower than the national average). By contrast, GDP per capita in Lubelskie and Warmińsko-mazurskie voivodships stood at less than 70% of the Polish average in 2018, which was a slightly worse result than in 2015. In the remaining voivodships, value of GDP per capita was lower than the Polish average, with the exception of three voivodships: Dolnośląskie, Wielkopolskie and Śląskie. In 2018, the ratio of GDP per capita in most voivodships to the Polish average GDP per capita was lower than in 2015. However, in some voivodships, including i.a. Mazowieckie, Małopolskie and Pomorskie, an opposite trend was observed.

Considerable differences between voivodships could also be observed with regard to average wages and salaries and the situation on the labour market. Like in previous years, in 2019 the average nominal gross wages and salaries were higher than the Polish average in three voivodships, i.e. Mazowieckie (by 21%) and Dolnośląskie and Śląskie (just slightly higher). The lowest earnings were observed in Warmińsko-mazurskie and Podkarpackie voivodships (approximately 85% of the average for Poland). For many years, Warmińsko-mazurskie has been characterized by the highest rate of registered unemployment in Poland. Wielkopolskie voivodship, on the other hand, maintained the lowest unemployment rate in the whole Poland.