Polish economy grows 4.3 percent in 2011

By Vanessa Gera

Associated Press

Published: Friday, Jan. 27 2012 7:21 a.m. MST

People sell used items on a street in Warsaw, Poland, Wednesday, Dec. 14, 2011. Poland still faces many economic problems despite strong growth since in joined the European Union in 2004. People across central and eastern Europe are balking at a request that they provide loans to the International Monetary Fund to help indebted countries using the euro. Many argue that they should not have to sacrifice to help people in the West, who enjoy a much higher standard of living even though their states are crushed by mountains of debt.

Alik Keplicz) - POLAND OUT -, Associated Press

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WARSAW, Poland — Despite the European debt crisis, Poland's economy grew a brisk 4.3 percent in 2011, even more than its strong 3.9 percent growth rate for 2010.

The preliminary estimate released Friday by the Central Statistical Office underlines how strongly the economy has continued to grow in Poland, the largest of the ex-communist countries now in the 27-nation European Union.

"This is even more than was expected, though close to what we planned a year ago," Prime Minister Donald Tusk said, expressing satisfaction and saying the numbers show his center-right government has managed the country well during a time of substantial financial upheaval.

The main motors of growth have been strong private consumption and accelerated investment by firms. The zloty currency has also weakened in past months, helping Polish exporters because it makes their goods cheaper on foreign markets.

Poland is also simply less dependent on exports to drive growth than neighboring countries like Hungary and the Czech Republic: When demand from abroad slows, Poland's economy has still managed to keep moving in recent years due to the internal demand. It was the only EU country to avoid recession during the global crisis of 2009.

However, Poland does produce cars, furniture and other goods that get sold in Germany and elsewhere in the EU, and it is expected to be hit by the larger European slowdown.

Various economists and institutions estimate the pace of growth in 2012 to slow to around 2.5 to 3 percent.

"Poland is better placed than its neighbors to weather the fallout from Europe's debt crisis, but it is still not immune," analysts at Capital Economics wrote in a research note, observing that growth already began to slow in the fourth quarter of 2011.

Still, last year's strong growth "cements Poland's position as Central Europe's star performer," Capital Economics said.

Poland still struggles with a number of problems, including a stubbornly high jobless rate. Other statistics released Friday show that unemployment in December jumped to 12.5 percent from 12.1 percent in November.

Tusk also expressed satisfaction that the Polish currency, the zloty, has been appreciating for more than a week, giving relief to Poles who have foreign currency loans and to drivers, since gas prices are set in dollars.

"It's very important to me that I travel to Brussels on Monday as the prime minister of a country that is really managing in the crisis," Tusk said.

EU leaders are meeting in Brussels on Monday to hammer out a new deal to help prevent future debt crises, especially in the 17-nation eurozone. Tusk has been threatening to not sign the deal unless it allows Poland to participate in talks on the euro, even though his country isn't yet in the eurozone.

Poland plans to make the currency switch to the euro one day and fears that it is being sidelined.

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