Poland's economy grows 1.1 percent in Q2

Poland's economy grew 1.1 percent in the second quarter compared to the same period a year ago, the government reported Friday — a result that far exceeded expectations for the ex-communist country.

The information appeared to show that Poland, a country of 38 million that joined the European Union in 2004, has suffered less from the global financial crisis than many of its neighbors.

The Central Statistical Office's report for the April-June period surpassed the 0.5 percent widely expected by analysts. The office said net exports and general consumption drove the positive quarterly growth.

Prime Minister Donald Tusk, who has rejected calls over the past year to boost spending to combat the crisis, said Friday's figures confirmed that his government has taken the right line with the economy.

"We are the only country in the whole EU that can brag of a second quarter result, compared to the same quarter last year, that is in the plus," Tusk said. "Poland is — not only in the region but in the whole EU — most effectively fighting with elements of the crisis."

Finance Minister Jacek Rostowski warned, however, that Friday's result "is not the end of the crisis, is not the end of the problems that Poland is going to struggle with."

But Rostowski also vowed the government would deal with the impact of the global economic turmoil "in the same flexible manner" as it had with the "first, strongest and most dramatic blow of the crisis."

Analysts, meanwhile, welcomed a growth figure that greatly exceeded expectations, but also noted underlying signs for concern.

"Relative to what's going on in the other countries of the region and western Europe this is a good result," said Maja Goettig, chief economist at Bank BPH in Warsaw. "But the structure itself is a bit more pessimistic."

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She noted that net exports drove growth in the second quarter, while there was a "significant slowdown in private consumption dynamics."

Goettig said domestic consumption could take a further hit as the year wears on if unemployment, which currently stands at 10.8 percent, continues to rise.

Ralf Wiegert, an economist for IHS Global Insight, echoed those concerns, but said the country's second quarter results were encouraging.

"Poland has now all but escaped from the threat of a recession," he said. "We think that Poland's economy already has enough spin to keep the wheel going."

He added that IHS expects Poland's economy to grow around 1 percent for all of 2009 followed by a slight acceleration in 2010.