Having avoided recession in 2009, recent data has suggested that Poland’s once gravity-defying economy is heading – like Felix Baumgartner – back to earth fast. GDP growth slowed sharply in the second quarter, while an economic adviser to the government warned that growth in 2013 could come in as low as 1.5%. All of which has led the government to adjust course on the economy.
Although much of the blame for the slowdown can be placed on the problems besetting the eurozone, austerity style policies at home haven’t helped. This reflects the government’s decision to prioritise financial stability, repeatedly highlighting the importance of the EU’s deficit target of 3% of GDP. Amid slowing growth, falling government revenues mean this target will no longer be met in 2012. And with public support for his government falling, Poland’s Prime Minister Donald Tusk has followed on the heels of the IMF by placing renewed emphasis on growth. At a speech on 12 October, he announced a stimulus package designed to provide a shot-in-the-arm to the economy.
Nowhere was this more welcome than the country’s construction sector. Confidence within the industry has remained low this year as a hangover from the construction boom leading up to Euro 2012 and a glut of new residential capacity have weighed on demand. A recent spate of high-profile bankruptcies among firms who took on razor-thin margins for infrastructure projects for Euro 2012 added to the sense of gloom.
The stimulus package will see PLN300 bn pumped mainly into infrastructure projects. Among the chief beneficiaries is Poland’s energy and power sector, which will see some PLN60 bn in investment. Spending on roads and railways is also expected to continue. On the Warsaw Stock Exchange, a sub-index tracking construction companies rose on the news. The prime minister also survived a confidence vote in the parliament – although a more telling test may be whether he can get confidence back into Poland’s economy.