The new member state of the European Union becomes the leader in Economic development

FROM THE REDACTION

Poland with the poplation of 38 million turned into one of the biggest countries in Europe by its economics.

It exceeded number of developed countries of Europe with its growth rate. Whad happened in Poland for the last 4-5 years, how did they manage to reach the growth of financial and economic indicators?
below you can find an exclusive material from Warsaw.

• Export Promotion Program
We applied to the Minister of Economy, Piotr Grzegorz Wozniak with several questions on export promotion program and generally on Economy.
– Are there any financial sources in 2008 Polish State budget for export promotion?
– For insurance and sub-insurance guarantees Zloty 2 billion 130 million will be provided from the budget. According to the authority` s resolution state budget deficit should not surpass Zloty 30 billion. Actually 2006 budget defect was line lower –25 billion Zlotys, and 23-24 billion Zlotys in 2007. Deficit should not surpass 28 billion 200 million, by budget deficit project.
Despite this, Zloty 50 million is put in the budget of the current year to support the polish businessmen’ participation in international exhibitions and to subsidy export program. Besides, budget will provide Zloty 2 billion 130 million for export insurance and guarantees.
Current positive tendencies importantly influenced on improvement of economy. First quarter of 2007 is characterized with high trend, but is lower comparing with 2006, which was developing in accompany with high dynamic of import and was result of high domestic demand on the background of producing increase. The condition reduced economy generation deficit.
According to Poland`s Statistic Central Office data, the first quarter of 2007 GDP increase reached 6,5%. Internal demand increase rose individual consumption up to 6,4%. Individual consumption statement of 2006 is lower relatively with the current year. Growing dynamics is the result of nominal free rise and family consumer credit rise (yearly rise statement included 40 %). Labor market improvement, salaries growth, society service sector improvement, money transferees party financing of farmers did an important bit for consumer expanse generation issue. Rising of consumer is confirmed by retrial selling rising trend.
Whole increase statement includes 24%, important increase in the result of gross fixed amount 26 %, what was formed by low prices on shares. The results prove that investment expanses generation expectation has positive affect, what basically comes on production of industries –consumer commodity and constructing materials, also on the firms providing investment works. High demand on investments is expectable.
According to Poland`s Central Statistical Office data, on January-June of 2007, VAT increase (6,9%) was the result of market service stabile increase (6,9%), on which comes 50% of VAT. VAT statement in industry includes 7,9% (assert by sold industry commodity). In the named period, VAT in constructing sector approached highest statement 22%. Increasing measure was stipulated by construction and producing conditions improvement (number of objects, where more then 9 employed, excels 30%).
According to 2007 first two data, constructing sector approached high record, with the fever of warm weather.
Poland`s GDP index of 2007 approximately includes 6,5 %. By better using of EU Founds whole internal capital will at average include 20%, whole consumption will rise with 6,2%, what excels 2006 data.
Acceleration in the dynamics of industrial production …
According to CSO estimates in 2006 industrial output for complete statistical population increased by 11.3%, and in entities employing more than 9 persons, increased by 11.9% compared to 2005. In the 4th quarter an increase was lower than annual average and amounted to 10.8% (yoy).
In the 1st quarter 2007 upward trend maintained. An increase in sold production amounted to 10.7% (against 12.3% in the similar period of 2006). It should be pointed out that monthly indices (yoy) indicate slightly slowdown in production growth rate (15.4% in January, to 5.6% in July).
The high increase in sold production of industry in the 1st quarter of 2007 was driven by acceleration in manufacturing (growth by 12.8%). Limited scale of growth was an effect of drops in electricity, gas and water supply (by 5.9%)
Higher dynamics was recorded in the production of industrial divisions and groups
considered as the carriers of technological progress. In the period of January-June
2007, their production edged up by 12.6%.
In the period of January-June 2007, 26 from 29 industrial divisions recorded improvement in the level of production comparing to the similar period of 2006.
Considerable gains were observed in the following divisions:
– manufacture of non-metallic mineral products other by 28.40%,
– manufacture of metal products by 22.9%,
– manufacture of machinery and equipments by 24.8%,
– manufacture of rubber and plastic products by 19.8%,
– manufacture of electrical machinery and apparatus by 19.0 %.
In comparison with the 1st quarter of 2006 declines were recorded in manufacture of wearing apparel and furriery by 2.8 %.
The level of electricity, gas and water supply was by 5.9 % lower than a year before. The drop was caused mainly by decrease in electricity, gas, steam and hot water supply (6.4%).
The biggest positive contribution to a sold production growth had, similarly to 2006, such
division as the manufacture of food products and beverages (growth by 5.7%). Simultaneously, the significantly positive contribution was made by motor vehicles, trailers and semi-trailers.
In the period of January-June 2007 labor productivity in industry, measured by production per 1 employee, was higher (7.0%) than a year before, with 3.4% larger average employment.
In 2007 an increase in sold production of industry will be continued and will amounted to ca.12%

Gradual acceleration in inflation
In 2006 the price index of consumer goods and services amounted to 1%. Despite acceleration in the 3rd quarter and slowdown in the 1st half of the year, the inflation remained above inflation target and amounted to 1.5% in the last quarter of the year.
In the period of January-June 2007 CPI index reached a level from variation interval of inflation target (2.2% comparing to corresponding period of the previous year). It resulted from favourable economic situation, which give a boost to the internal demand. It was caused by faster than CPI index increase in food prices rate. In the 1st quarter food and non-alcoholic beverage prices increased by 3.9%. Poultry prices increased by 17.3%. Moreover vegetable prices significantly increased by 12%. A rise in prices for housing was recorded (by 4%), particularly in energy products. The dynamism of gas prices maintained, they rose by 8.6%. Fuel – 11%.
Because of the increased fuel price, core inflation reached the level of 2.7% in June 2007. In the first quarter of the year average index maintained at the level of 2.2%.
In the 1st quarter of 2007, the prices of sold production of industry were on average by some 2.7% higher, in comparison with 2006. A speedup of the price rate was mainly caused by a price rise in raw materials. The highest growth was recorded in mining and quarrying (5.6%),
In the three-month period of 2007 the increase in electricity, gas and water supply was relatively high and amounted to 4.4%. In the same period in manufacturing the increase by 2.1% was recorded. It should be stressed that the section recorded drops a year ago, and increases have taken place since May 2006.
In the 1st quarter of 2007 prices in construction and assembly production rose by 6.8% in comparison with the corresponding period of the previous year. The situation was caused by surplus of demand, resulting in shortages of construction materials.
On the one hand, in 2007 inflation rate will be driven by high domestic demand rate and on the other hand by still the highest in the EU unemployment. Simultaneously, growth in wage expectations is possible, if lack of workers in some occupations is taken into account. Due to unfavorable weather conditions in agriculture, an impact on food prices in the rest of the year is not exactly known. An appreciation of the Polish zloty is still expected. In respect of all factors it is estimated, that price growth should exceed 2.1%.
Acceleration in the dynamics of construction production…
In 2006 investment recovery was accompanied by high increase in production of construction. A scale of growth in construction and assembly production for complete statistical population is assessed at ca. 12%, and in companies with more than 9 employees amounted to 17.5%.
A good business survey maintained in the first months of this year. A production in the 1st quarter increased by 30.2% comparing to similar period of last year. A result should be perceived positively, especially taking into account, that bad weather circumstances at the beginning of the year contribute to decreases in January and February (a few per cents in comparison with the same month of the previous year) and expectations about future were not good. However, weather circumstances in the first months of the year influenced positively on performance of the sector and resulted in almost 60 percentage growth annually. The increase was driven by considerable rise in sales of repairs (by 34.5%) as well as sales of investment works (by 28.6%).
In the given period, considering the type of construction works, the highest growth (31.5%) was recorded in the entities dealing with building construction and civil engineering.
In the period of January-June 2007, 52.7 thousand dwellings were completed, which is less than the previous year’s level by 4.7 %. Only in private construction and in case of dwellings own by enterprises, amount of dwellings completed was higher than a year ago. In consequence a share of private construction increased to 57.4%, as a result of an improvement of financial situation of households and better access to housing credits. A considerable share in total amount of dwellings poses dwelling for sale or rent, however there was drop recorded (by 1%). The highest decreases in social rental fund and municipal dwellings were noted (respectively by 20.6% and 46.5%) but their share in the dwellings structure is not essential.
In the period of January-June 2007 as many as 114.4 thousand permits for dwellings were granted. The sole drop were recorded in housing in the framework of social rental fund (by 26.4%). In the rest of construction forms the increase in new permits was recorded – in case of dwellings for rent and sale (by 71.5%), private construction (by 46.3%).
86.2 thousand of new dwellings are started to be built, which is by 43% more than a year ago.
In 2007 an increase in construction output will be considerably higher than in 2006 and amounted to over 25%.

• Banking Sector
After Leszek Balcerowicz’s term expired and he was replaced as President of the National Bank of Poland, the banking sector was headed by person being a stranger to it. Although the system is well managed and fully arranged, analogue to the western banking system and therefore is distinguished with stability.
Discussions with the representative of the National Bank of Poland Pawel Samecki made us sure in it once again.
Early elections affect Poland’s budget? Theoretically elections do not make any influence on the state budget , but we would like to know about the real situation while the inflation increases, Stock exchange index falls. what were the causes to all these?
– They made several normative acts in Poland providing regulation of banking. The acts will maintain regulation directives related to Euro Council directives. Legalization of the law was provided from the beginning of the current year and its was caused by capital related Euro Council directives` realization. The directive regulates liquidity and operational risks and their related issue by absolutely new methods. Banks should have compulsory reserves, but their regulation will be provided by absolutely other sort of scheme. As it was before, compulsory reserves should be equal to its deposit. Bank law regulates general dealing. Every exact order or exact act related to the law acts made by Bank Observation Commission. But from now, while bank reserve calculating, each bank will have to treat its own external model and present Bank Observation Commission to be enforced, which will determine possible operational risks is bank. Commission may receive or not received the model. Bank Observation Commission is independent branch and Bank law registration, which will be enforced this year, was main law for us. Works for collaborating with financial markets are under the way for now. We came to conclusion, that financial markets approached level of development, when are able treating different legislations and all these should be done by people exactly knowing, what will be necessary for future development. So in preparing of new legislative acts and projects will participate financial markets` representatives, Finance Observation Commission and Finance Ministry officials. The new law will be finally confirmed by Finance Minister, or we `ll attempt reach compromise between the Commission`s financial market representatives and Observation Commission. Cabinet of Finance Ministry might confirm or return the legislation for repeated consideration. Our task for now is checking correspondence of the legislation will bank`s dealing, what requires several month of work. We are also scheduling to form separate working team, which will provide check dealing of banking, insurance and pension funds. Poland is Euro Council member country and we can receive financial support from the Council member different countries. For the issue they should open their representation is Poland ` s banking sphere. Current legislation and tools of regulation should be reviewed because huge competitiveness on financial markets, for existed financial structures and firms in the country is competitive capacity with foreign structures.
_ What is minimal level of banking capital?
_ It depends on the services suggested by bank. The minimum includes Zloty100 million for the universal banks.
_ What type of banks are there in Poland?
_ Poland has cooperative banks, universal banks, banks offering services to foreign clients, and mortgage banks. There are also banks not submitting to our observation.
_ How many commercial banks and foreign banks ` representations are there in Poland?
_ About 60 commercial banks. As far as foreign banks are concerned, The National Bank of Poland possesses the data on them. If a bank has its branch in our country it ` s under our observation system. Although, if it has only a representation, it is not controlled by us.
_ 60 % of banking capital is of foreign origin in Georgia. What is the share of foreign capital in Poland?
_ There are different methods for foreign capital share calculation and estimation. For example, according to Poland ` s National Bank data, share of foreign capital in Poland ` s banking system includes 47 %, by other data –70 %.
_ Can a bank create its sister company? For example, insurance companies.
_ Bank and insurance companies may have common capital, but they should have defined functions, insurance is not able to be dependent on bank. Bank has right found insurance company, but according to Poland ` s legislation bank representative has not right manage and observe insurance companies. Form of insurance companies is JSC and presents to be independent structure.
_ What are the circumstances regarding bonds and other treasury bonds of Poland’s Ministry of Finance?
_ Emission of treasury bonds serves meeting state external liabilities, as a rule. But while determining the issue, that number of incomes increased in state budget, we will party interrupt emission of treasury bonds. The issue is provided by the National Bank of Poland and Finance Stock.
_ How does a stock exchange participate at open market?
_ It fulfils just role of regulator at the open market. The stock faced important development during recent two years period. 371 companies coating on Warsaw ` s Finance Stock and tens of companies are expecting for their turn. Capitalization of Poland ` s companies include 549 million Zlotys and 249 million Zlotys of foreign companies, at Warsaw Stock Exchange for today. Warsaw Stock Exchange is on the second place after London Stock Exchange by number of companies and capital. Besides, investment and pension funds face fast development in Poland. Capitalization of investment funds include approximately 150 billion Zlotys, and of pension funds –150 billion Zlotys. Of course investment and pension funds may put their capital in foreign stocks ` shares, but we wish this capital to be remained in Poland and consumed by our entrepreneurs. Reforms were provided in Poland ` s pension system during 90s. Each pensioner had their accounts before the reform and after that was receiving pensions. But after that we created individual pension calculating system. Our social insurance system has two directions for today. One part of social insurance comes to state instances, where pensioners are paid minimal pension. As country has too many pensioners, the authority has to separate additional amounts separating. The second part of social insurance s put in individual accounts selected by ourselves. That is commercial organization, where exactly is determined what part of incomes should be invested in treasury bonds, obligation and what part in stocks. Besides, there is also voluntary social insurance, provided by employer toward an individual wishing to increase its pension.
_ Does the National Bank of Poland implement the sterilization of foreign currency? What steps does it make for foreign currency sterilization and for keeping a national currency rate?
– National Bank of Poland purchases foreign currency flown from Euro Council member states determined for Poland. We provide operations at open market, provide sterilization of the currencies, although not of market operations, but via ordinary money operation way with banks.
– What would you say regarding prices’ increase on food?
– Prices obviously rise on food, but this products more and more less role play in consumption basket, it` s share consumption basket includes 26 % for today. Fortunately, Poland ` s politics has too small influence on country` s economics. Provided political events during a year and a half have not reflected on country` s financial stock exchanges, economy and inflation. If monetary authority will keep continue same balanced, equilibrium money polity, we will be capable keeping inflation level on 2, 5 %.
– As we know, interest rate of Poland ` s National Bank reaches 4, 5 %, that may result in production reducing in the country. How is the labor market regulated and unemployment level reduced?
– I can not completely agree with the opinion that such interest rate of the National Bank negatively affects Poland ` s economic development. For today we have the highest index we ever had during the recent ten years period. From Poland ` s neighbor countries, just Slovakia has higher economy generation index. Monetary authority of our country believes that reduction of interest rates will provide inflation in the country. Labors market is gradually developing. The obvious example is that the minimal salary hovers over 900-1050 Zlotys, and is same in all regions of the country. Unemployment level sharply reduced during recent years. If unemployment level was 20 % during the second half of 2006, it is facing 12 % reduction for nowadays, what is the result of domestic economy dynamic growing.
– What is currency rate of Zloty against USD and its changing dynamics?
– A lot of changes occurred during recent years, but our currency rate keeps its positive during last half year period and it assist in battling against inflation.
According Central Statistical office data, on the first quarter of 2007 on the whole use expenditure Poland ` s economy faced 7, 4 % GDP increase. In GDP increase the same share has investments, its trend importantly increase following its producing and constructing sector high activity.

• Agriculture…
Agriculture is one of the successful sectors of Economy in Poland. Several years ago the main share of Poland’s agricultural products export went on Russia. The country imposed the first Economic embargo to Poland. After becoming the member of the EU entire reforming of the agriculture took place. The following was changed:
1. Production technology;
2. Food Production control and safety, introducing HASAP System.
Poland has totally moved to European standards and it is one of the major suppliers of agricultural products to Europe. Poland has gained an important experience not only in the growth of agricultural production, but also in changing export map (geography) by means of reforming standard systems. This has an utmost importance for Georgia. Its worth noting, that Poland’s Minister of Agriculture is ready to assist Georgia in solving these issues.
In spite of fact that the Minister of Agriculture resigned as a result of well known scandalous events, Ministry has started preparations for the visit to Georgia in November for the exhibition arranged in Tbilisi. It expresses its readiness to support Georgia financially and technically in reforming corresponding structures’ sectors.
Agriculture of Poland, despite being subsidized form the EU , becoes one of the leading sectors of economy.
in 2006-2007 Europe had a lack of crop, but Poland escaped these circumstances by means of reforms, decrease was not too obvious.
According to the CSO data in 2006 plant production decreased by 5.5%, however animal production increased by 2.5%. As a consequence, the global rural production dropped by 1.4%. Crop of basic cereals with cereal mix decreased by 19.1%. The crop of potatoes was lower by 13.4% than the last year’s crop as well as sugar beets production which dropped by 7.9%. An increase in production of cattle for slaughter amounted to 13.8%, pigs for slaughter increased by 9.3% as well as poultry for slaughter by 2.1%.
In the period of July 2006-March 2007, the gross output market was characterized by lower procurement of crop output (by 26.8%), compared to the corresponding period of 2005/2006. The wheat procurement was lower than a year before by 27.0%, and the rye
procurement decreased by 25.6%. Low supply of cereals and high demand on cereal grain influenced on significant rise in cereal’s prices in scale of year.
In 2007 the procurement of cereal was lower by ca. 38.6% than in June 2006. The wheat prices were higher by 39% than in March 2006, and rye prices by 58.8 %. Prices of potatoes shaped at the high level.
In the 1st quarter of 2007 the animal products’ market was characterized by 7% higher procurement of animals for slaughter. An increase by 20.2% was recorded in case of cattle (in terms of meat), and in case of pigs – by 10.3%. A supply of poultry scantly lowered and procurement was lower by 0.1% than last year’s level.
In the 1st quarter of 2007 an average price of majority of agricultural products was higher than in 2006. The cattle for slaughter prices were somewhat lower than in corresponding period of 2006. Poultry was bought in at a 26.7% higher price than a year earlier, while the supply lowered against previous year’s level. A supply of milk increased comparing to the previous year, and price increased in average by 5 %.
According to the CSO data in the year of 2007 the production of grain will increase by 23.2%, vegetable- 9.5%. Fruit production will decrease by 58.7-51.3%.

Domestic trade – increase in sales
In 2006 volume of retail sales for complete statistical population exceeded previous year’s level by ca. 8.1%. In enterprises with more than 9 employees the rise of 11.9% was recorded.
In the period of January-June 2007 retail sales in constant prices exceeded previous year’s level by 15.6%. In each of commercial enterprises’ group the growth was noted, and the biggest one was observed in newspapers, books and other sale in specialized entities .High dynamics in sales was observed in entities selling radio and television sets, household appliance and furniture, as well as motor vehicles, motorcycles and spare parts ( 2006-16.0%).
Trading companies employing more than 9 persons was by 16.2%. It was the result of rises in each activity of enterprises.
Labour market – improvement of the situation…
High unemployment rate and low employment rate still create major problems in the Polish economy. Taking into account the character of the Polishlabor market – structure of the unemployment as well as mismatch between demand and supply can deepen the problem. Increasing emigration of highly qualified workforce is accompanied by lowering amount of economically active persons. Several years ago the level of unemployment reached 25%. it was one of the biggest indicators in Europe. During recent years, the indicator started to decrease, new vacancies were open and the level on unemployment reached 12-14% Nevertheless, after studding a real situation locally, we found out that a real unemployment in Poland reaches 5-6%. The reason to is lies in a very interesting fact: the government of Poland provides a saerious support and assistance to an officially fixed unemployed person. Therefore quite a number of people prefer to be registered as unemployed and receive both: salary and a support form the state. Moreover, there is a deficit of a labor force in the sphere of construction that hampers the assimilation of new capacities. qualified staff moves to other developed countries of Europe, that have high salaries.
Since the 2nd quarter of 2003 a gradual improvement of the situation on the labour market has been observed. The amount of employed persons among individual farming is shifted mainly to industry and service sectors, and service sector has still the biggest share in an increase in an amount of working people. In the 1st quarter of 2007 the number of employed persons increased (by 741 thousand persons), as well as the number of economically inactive (by 151 thousand persons) in comparison with the previous year. Moreover, the number of the unemployed and the unemployment rate decreased (by 817 thousand persons and by 4.5 percentage points, respectively).
The low employment among the youngest and the oldest employed persons is very specific for the Polish economy.
The main factors behind labor market performance are as follows:
• large increase in labor productivity,
• withdrawal from the labor market (deactivation), due to concerns connected with job loss and unemployment (pre-retirement benefits, pensions and so on). The structural factors are as follows:
• insufficient level of human capital, especially among people over 35,
• still relatively high level of average labor costs, resulting from the tax wedge,
• a mismatch between supply and demand on the labour market (low qualified unemployed),
• limited vocational and territorial mobility of labor force.
In the 1st quarter of 2007 a regular increase in the average employment in the enterprise sector has been observed (expressed both in terms of month on month and year on year).. The average employment in the enterprise sector in the 1st quarter of 2007 was higher by 4.4% than in the previous year. The increase was recorded in almost all sections: construction (9.4%), real estate and business activities (6.2%), trade and repairs (3.4%), transport and communication (2.7%). The average employment dropped in sections: mining and quarrying (by 1.7%) and electricity, gas and water supply (0.9%).
At the end of June 2007 the number of registered unemployed shaped at the level of
1.89 million persons, i.e. by 23.8% lower than in the same month of the previous year. The unemployment rate was dropping gradually since January 2005.
Increasing production, especially in the service sector, as well as economic growth, which lead to increase in demand for work, as a result of more labor-intensive services than industry, lead to improvement on the labor market.
Increase in wages, salaries and social benefits
In the period of January-March 2007 the average gross salary increased by 8.4% comparing to the corresponding of the previous year. The most significant growth was recorded in the following sections:
construction (14.6%). Among the manufacturing divisions the highest increase in wages and salaries took place in entities manufacturing wood and wood, straw and wicker products (14.2%), other nonmetallic mineral products (12.9%), transport equipment (11.6%). The only drop was recorded in manufacturing of radio, television and communication equipment and sets.
The average monthly retirement payments and pensions from non-agricultural social security system in the 1st quarter of 2007 was higher by 4.1% than a year before The average retirement payments and pensions of individual farmers increased by 2.9%.
Real increase in average wages and salaries in the national economy is expected to be much higher than in 2006, if dynamic surge in wages in nominal terms is taken into account, even if inflation is expected to be higher.

• Public Finances
In 2006 the budget receipts amounted to PLN 197.7bn and the budget expenditure – PLN 222.7bn, in nominal terms. The budget deficit was strongly lower than a year ago, both in nominal terms, and in terms of the Budgetary Law execution.
In the period of January-June 2007 budget revenues amounted to PLN 1153 bn and represents 50.4% planned in the Budgetary Law. It exceeded the previous year’s level by 24.9%. An expenditures shaped at a level of PLN 119bn and represents 45.9% planned in the Budgetary Law. However expenditures increase was lower than revenues, and its growth amounted to 8%.
The revenues from indirect taxes are the main receipts items. These revenues account for
62% of a total amount of incomes executed in the 1st quarter of 2007 and it was higher than the previous year’s level by 16.3% (in nominal terms).
Other elements which have significant share in total amount of incomes are the inflow from state budgetary entities and from personal income taxes, which made up 14.7% and 10.3% respectively. A rise in inflow from indirect taxes was a result of a rise in excise duty receipts (represents 32% of revenues from indirect taxes) and VAT, mainly due to an increase in retail sales. However a rise in income taxes resulted from wages growth as well as good financial condition of entities.
• Monetary policy
At the beginning of the year 2006 a cutting interest rates, observed in 2005, was continued. The Monetary Policy Council lowered interest rates seven times by a total of 2.5% percentage points
Rising prices of fuel could be a source of inflationary pressure, however its influence was compensated by stronger exchange rate of zloty.
On the first half of 2007, interest rates on loans changed four times. But increased in April and June with 0, 25 %.
According to preliminary data of the National Bank of Poland the money supply (M3) grew in June2007 by 14.4% comparing to the same month of the previous year. Growth in currency in circulation (outside banks) amounted to 29.1%. Significant growth of deposits and other liabilities in households was observed (37.7%).
As far as credits are concerned, their value increased comparing to the corresponding month of the previous year. Such an increase was caused mainly by high growth in credits for households as a result of improvement in financial situation of households, as well as positive assessment of future business outlook. In annual terms, credits in non-commercial institutions acting for households have been increasing.
Further increase in volume of credits among enterprises is expected, which is corroborated by good assessment of macroeconomic situation in the future. Thus, further speedup in investment is expected. Furthermore credits made up a source to merger and take over companies

Exchange rate
In 2006 the zloty strengthened against the euro as well as against the US dollar. There was slightly weakened of Polish currency against the dollar observed in the 1st quarter of 2006. The average exchange rate of the Polish zloty against EUR amounted to PLN 3.8951, and the US dollar – PLN 3.1025. In the second quarter of 2007 strengthening was observed to both currencies. It was a result of economic growth and right managements of salary tariffs.
As far as external factors are concerned, macroeconomic data from the United States and Western Europe is playing a significant role. The US economy is characterized by relatively low economic growth (in the 2nd quarter 2007 the GDP growth rate amounted to 3.4 %, in the 1st quarter – 0.6%) and in the European Union (the euro zone– 3.1% in the 1st quarter of 2007). However the situation on the labor market is better in the United States than in the EU. In June the unemployment rate in the US amounted to 4.5% and in UN more than 6.9 %. Nevertheless, the inflation rate is somewhat lower in the euro area than in the United States.
Macroeconomic data such as an acceleration in economic growth contributed to an appreciation of the zloty. Other components such as high dynamics of production, higher investment and consumption demand and permanent improvement on the labour market, influenced on an appreciation of Polish currency, too.

Increase in foreign trade turnover…
According to the preliminary Central Statistical Office data, in the period of January-
June 2007 the value of exports denominated in EUR (in current prices) was higher by
14.0% as compared to the similar period of 2006 and reached a level of EUR 38.9 bn,
while the value of imports increased by 14.5% and amounted to EUR 45.1 billion. The negative balance of foreign trade reached a level of EUR 6.1bn.
The deterioration of deficit was caused by larger deficit in turnover with developing countries and decreasing surplus in turnover with developed countries. Simultaneously, the deficit in foreign trade with the third countries was stabilized, as a result of slight decrease in imports of oil and partial negative effect caused by restrictions imposed on food exports to Russia. A surplus in turnover with development countries (EUR 1.5bn), and increase in surplus in the trade with EU countries should be highlighted.
In the five-month period, like in the previous years, Germany was the main trading partner of Poland (26.4% of exports and 24.1% of imports). In trade with Germany exports increased by 7.1% and imports by 14.8% comparing to 2006. Among the main trading partners Poland recorded increases in trade with Russia (increase in exports by 33.2% and in imports 2.1% comparing to 2006). The share in total exports increased by 0.7 %. to 4.5%, and in imports decreased by 1.0% to 8.7%. It should be pointed out that importance of China’s imports is increasing (increase of share in Polish imports by 1.2% to 6.8%), which mainly resulted from a higher imports of household appliances and articles, furniture and footwear. Due to considerable increase in exports of electrical machinery and metals, significant surge in exports to Ukraine and to the United Kingdom was recorded.
According to the initial data from the National Bank of Poland, in the period of January-May 2007 the value of exports amounted to EUR 44.5 billion and was by 18.7% higher comparing to the same period of the previous year,
As a result, trade balance was negative at a level of EUR 2.7 billion, against EUR 0.9 billion deficit in the corresponding period of 2006.
In 2007 exports revenues (in terms of balance of payment on transaction basis) denominated in euro are expected to increase by some 14.5% and to amount to EUR 106.7billion, and import expenditure should increase by 16% to EUR 112.7 billion. Trade deficit will amount to some EUR 5.9 billion. Exports on CSO basis is expected to reach a level of EUR 101.1 billion.

Deterioration in balance of payments
Preliminary NBP data for the period of January-May 2007 indicates a substantial deterioration in the balance of payments as compared to 2006. An increase in the deficit was recorded on the current account. The result was mainly driven by higher deficit of goods trade (EUR -2,683million against EUR -900 million in 2006) and deterioration of negative income balance (by EUR 1.205 million).
As a result, the scale of deficit growth was slightly limited. The capital and financial account balances also recorded surpluses. The inflow of other foreign investment amounted to EUR 873 m( EURO 2.4 billion in 2006)

Poland`s Special Economy Zones’ development goes on In 2006 Volume of Realized Investment Included 10 billion Zlotys in Spanish Economic Zones
Released permission for starting business in Poland`s especial economy zones approached credit number. In 2006 230 permissions were released, what is quarter less relatively with 1995. Realized investment number in Poland ` s especial economy zones included 10 million Zlotys, but realized investments in whole Poland included 35 billion Zlotys.
Increased investment number provides employment generation in Poland, during 2006 –150 000 people were employed in especial economy zones of Poland.
Especial economy zones in Poland maintain separate sort of business gathering in the country. Fourteen special economy zones include 60% of whole market investments.
Poland`s special economic zones whole territory rose with 600 hectares in 2006. It should be outlined, that economy zones` territory growth takes place a little bit far from central regions. Economic zones aim attraction of investors, which`s obvious example is Procter&Gamble.