In a world of two economic speeds, Poland stands aside and grows

Nowadays, consumers are much more willing to spend money on fun than on durable goods. This is why economies with a greater share of the service industry, such as the US, perform better around the world. Our economy is unique here because it is structurally similar to industrial Germany, but does not fall into recession. On the contrary - this year it is expected to grow by about 3%.

Recession in the manufacturing industry

Typically, the structures of economies matter more to economists than to ordinary citizens. Now, however, structural economic differences directly affect the performance and growth of individual countries, and thus - the economic situation and the wallets of citizens. The global economy should grow at a rate of approximately 2024% in 1,5. and is heading towards the so-called "soft landing". However, at the same time, there is a growing discrepancy between the improving situation in services and recession in the manufacturing industry. It turns out that currently consumers they are much more willing to spend money on fun than on durable goods. This causes economic problems for countries such as Germany and China, where the share of industry in GDP is the highest. Instead, it helps the United States, its economy and its stock market.

Source: eToro

The global slowdown in the manufacturing industry is deepening. This has pushed Germany into recession and contributed to recent growth disappointment in China. Global PMIs have been falling for seven months, and manufacturers are now cutting staff and purchasing. This also led to a decline in inflation, a China is on the verge of deflation. Services and consumer spending were the positive economic surprise of the past year. They helped keep the US and UK out of the predicted recession. At the same time, unemployment rates are near record lows. Falling inflation supports growth in real wages and spending. The latest PMIs show that service segments such as technology, healthcare and tourism are global growth leaders.

Poland is a beneficiary of the deglobalization process

Against this background, Poland is an exception. We have a large industrial sector, which accounts for as much as 30 percent. our GDP [see chart]. For comparison, in Germany it is 27 percent and in the USA 18 percent. and in China as much as 40 percent. The share of services in our economy is 57 percent, while in Germany it is 63 percent. and in the USA as much as 78 percent. With this economic structure, economic growth in 2024 is forecast to be around 3%. There are several reasons for this growth - it turns out that Polish industry, compared to its competitors, is doing very well, becoming a beneficiary of the deglobalization process. After the pandemic, many companies moved their factories from China to Europe, locating them in Poland. It helps all the time too lower level of wages in Poland than in other EU countries and a relatively weak zloty. The diversity of recipients of Polish products is also of great importance. In a situation where exports to Germany have fallen significantly, other export directions make it possible to stabilize production.

At the same time, Polish consumers are willing to spend money, which supports growth. According to data from the Central Statistical Office on the consumer economic climate, consumer sentiment related to the economic situation in the next 12 months is currently at the highest level in 4 years. The percentage of consumers declaring their willingness to incur larger expenses, such as renovating an apartment or buying a car, has increased significantly. This is the result of the decline in inflation and its appearance for the first time in a long time real increase in wage levels. All this means that the Polish economy is highly diversified and resistant to restrictions. While many of the world's economies suffer, becoming prisoners of their structure.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.