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Macroeconomic environment

Macroeconomic environment

In 2016, the global economy grew 3.1% year on year according to OECD (Organisation for Economic Co-operation and Development) and 1.7% year on year taking into account the inflation factor. According to Eurostat‚s estimations, the real GDP growth rate across the EU was moderate at 1.9% year on year. The growth rate remained stable relative to 2015, despite the high probability that the EU’s ranks will shrink following the outcome of the Brexit referendum in the UK. The positive economic sentiment was attributable to several factors, including the European Central Bank’s quantitative easement policy, higher capital expenditures and the continued upward trend in the prices of raw materials. As a result, Europe recorded an inflation rate of 1.2% year on year with projections showing that the uptrend will be maintained. A positive sentiment also continues on the European labour market where the number of unemployed has fallen again and the unemployment rate (8.2%) is at its lowest in 8 years.

Organisation for Economic Co-operation and Development

Preliminary estimates of the Gross Domestic Product (GDP) published by Poland’s Central Statistical Office (GUS) indicate that in 2016 the Polish economy grew 2.8%, down 1.2 pp relative to 2015. The slight slowdown in Poland’s economic growth was caused by a temporary decline in investment activity (5.5% year on year**), both in the public and private sectors. The dampened investment sentiment is chiefly attributable to delays in the completion of infrastructural projects co-financed with EU funds. On the other hand, domestic demand stabilized at 2.4% year on year** on improved private consumption, robust labour market and launch of government social programmes. According to GUS, as at the end of 2016 the unemployment rate was 8.3% (down 1.4 pp year on year), its lowest for over 25 years. The consumer price index (CPI) data published in December 2016 pointed to a return of month-on-month inflation after two and a half years, with rising commodity prices among the contributing factors.

Selected macroeconomic indicators in 2012-2016

Gross Domestic Product (quarterly data)*
Inflation (quarterly data)*
Unemployment rate (quarterly data)*

* Source: Central Statistical Office

EUR/PLN and USD/PLN exchange rates

In 2016, the currency market was highly volatile. The Polish złoty significantly weakened relative to the euro and the US dollar amid concerns about the economic situation in China. However, the depreciation of the PLN was short-lived and the exchange rate was soon back on a downward trajectory. In April, the EUR/PLN and USD/PLN pairs were at their all-year low of 4.2455 and 3.7193, respectively. Rising expectations regarding potential interest rate hikes in the US caused the exchange rate to deviate from its established price band. Market sentiment was negative, spurred by the UK’s exit from the EU.

Contrary to investors’ concerns, the third quarter brought about a stabilization in forex trading and the Polish currency once again rallied. Donald Trump’s win in the US presidential elections had a profound impact on market sentiment. In consequence, the USD/PLN exchange rate spiked to its highest level since 2002 (4.2493) and the EUR/PLN pair recorded an all-year high (4.5035). The downward trend was only consolidated by interest rate hikes in the US and the Fed’s plans to pursue a tighter monetary policy.

Federal Reserve System – the central banking system of the United States
Exchange rates