Consumption stimulates GDP growth

opublikowano: 27-11-2007, 13:37

Warsaw (Puls Biznesu) – Car, clothes, consumer electronics, cosmetics, medicines and book producers saw their sales grew substantially. This trend will continue.

Retail sales amounted to 19.4 percent in October. The index has not grown that fast in years. It was in March 2004 when the dynamics exceeded 30 percent. At that time, the Poles feared price increases expected after entering the EU which happened on May 1st 2004. Entrepreneurs welcomed the results. However, the retail sales growth are not always caused by bigger shopping. In case of food, growing prices were the reason. Economists expected big growth but the data surprised them.

“The results turned out to be much better than expected. If we analyze the other data, we should not be very surprised: for months, we have seen substantial employment and wage growth”, Marcin Mroz, Fortis Bank chief economist said.

In October, unemployment rate dropped to 11.3 percent.

Piotr Kalisz, Citibank Handlowy economist, points out that the sales data are good prognosis for the GDP growth in the fourth quarter.

“Growing sales plus 11-percent growth of production in October suggest that the GDP growth in the fourth quarter may amount to 6 percent”, Piotr Kalisz believed.

High sales dynamics will probably continue.

“In upcoming months, consumption may grow by 15-20 percent and it will be the main engine for the economic growth”, Marta Petka, Raiffeisen Bank economist said.

Economy growth generated by consumption posts a higher risk to inflation than when GDP growth is caused by rising investments. Monetary Policy Council may raise interest rates by 50 base points as early as tomorrow. Marcin Mroz expects that in 2008, the interest rate will grow to 6 percent, or by 1.25 percentage points.

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