Macroeconomic environment

The consumption growth rate accelerated from quarter to quarter, accompanied by an improvement in the situation on the labour market and deflation increasing the real purchasing power of households.

The growth rate remained stable throughout 2014 and amounted to 3.3% y/y in spite of unfavourable developments in the external environment. Apart from the level of economic activity in the euro area deteriorating again, the Polish economy was adversely affected by the deteriorating geopolitical situation: the escalation of the Russian-Ukrainian conflict (the significant deterioration in the economic situation in Russia and Ukraine as well as sanctions and restrictions in trade between Russia and the EU) reduced the GDP growth rate by approx. 0.6-0.8 pp. in 2014. A strong drop in oil prices was a buffer alleviating the negative impact of the deterioration of conditions in the external environment. Thanks to this domestic demand remained on the path of strong recovery. The consumption growth rate accelerated from quarter to quarter, accompanied by an improvement in the situation on the labour market and deflation increasing the real purchasing power of households. The strong investment demand at the beginning of the year was backed by favourable weather conditions and changes to the applicable laws, whereas in the second half of the year the expansion/modernisation of the production potential in the automotive and power industries created favourable conditions for maintaining a nearly ten per cent growth rate of investments. The investment projects currently implemented in these sectors are less sensitive to changes in business activities (a lower correlation with the business cycle), which offers additional support for domestic demand and makes it more resistant to any turbulence abroad.

Given the accelerated GDP growth rate in 2014, the increase in the employment rate in the corporate sector by 0.6% y/y, compared with the decrease by 1.0% in 2013 was recorded, along with reducing the registered unemployment rate by 1.9 pp. per annum to 11.5% at the end of 2014 (preliminary data of the Ministry of Labour). The increase in wages and salaries in the corporate sector accelerated to 3.7% in 2014 from 2.9% in 2013.

GDP and its components growth rate (%, y/y)

Unemployment and employment rate (end of period, %)



In 2014, the average annual CPI inflation rate, measured with the consumer price index, dropped to 0.0% y/y from 0.9% y/y in 2013. The downward trend was particularly strong in the second and fourth quarters of 2014, in the first case due to a supply shock on the food market and, at the end of the year, due to a slump in global oil prices and the delayed effects of the Russian embargo on food (imposed in July in response to the EU’s sanctions against Russia). The price growth rate dropped below zero in July, and then deflation deepened only to reach
-1.0% y/y in December. The deflationary tendencies in 2014 did not have a negative effect on the Polish economy thanks to, i.a. a low level of indebtedness of the public and private sectors.

In accordance with the ‘Monetary Policy Guidelines for 2014’, the objective for Monetary Policy Council (MPC) was to maintain inflation at the level of 2.5% with a fluctuation range of +/- 1 pp., but the President of the NBP pointed out that in the face of non-monetary nature of the drop in prices, the impact of the MPC decision on inflation remains limited. Next to the GDP growth excessing 3% y/y it was the main reason why the Council has not eased monetary policy despite the systematic decline in inflation. In October it decided only on one action, when it came to decline in interest rates, limiting range of interest rates. The deposit rate was left unchanged (at the level of 1.00%), the reference rate was reduced by -50 b.p. (to 2.00%), and Lombard rate by -100 b.p. (to 3.00%). Deeper Lombard rate reduction resulted in a significant limitation of the maximum interest rate on loans, which is determined by 4 times the Lombard rate.