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BIEC: economic climate marginally better in August


The Leading Indicator (WWK), which provides information on future trends in the economy, gained 0.2 points in August, the Bureau for Investments and Economic Cycles (BIEC) reported. Although it was the third consecutive improvement of the indicator, its scale was small, and the WWK level fluctuates around similar values from the mid-2010. According to the Bureau, after the expiry of the demand impulse related to the VAT rate increase at the beginning of 2011, no new forces emerged in the economy that could give it a greater momentum. The debt crises, along with impairing growth prospects in the eurozone and the US, strongly hamper the chance for faster economic growth in Poland.

Of the eight component indicators of the WWK, three improved in August and five deteriorated. The biggest positive contributor was the higher indebtedness of households due to loans, however it should be mentioned that this was primarily a result of the increased value of the Swiss franc. Loans granted for enterprises also increased, although considering the deteriorating financial standing of many companies and growing problem of payment delays, it can be assumed that the increase in credit activity referred to a great extent to working capital loans rather than investment loans. The WKK growth was contributed to by a further fall in inventories of finished goods, although according to BIEC this was probably not a result of revived demand, but rather an adaptation of stock levels to weakening business activity. Amongst components having negative impact upon the indicator’s value, special attention should be paid to a decreased inflow of new manufacturing orders, in particular those dedicated for the domestic market (the sharpest decline of orders is sensed by producers of textiles, furniture and food products). In the face of a significant production slowdown, labour productivity is continuously decreasing. In August the assessment of entrepreneurs regarding the financial standing of their companies deteriorated, as well as their assessment of the general economic situation in Poland.

The WWK is a prognostic instrument. It is a measure of the current state of economic activity and provides advanced information on upturns and downturns in economic activity in relation to GDP as well as data on production, retail sales, wages and household incomes. The average prognostic timeframe of the WWK index in relation to the actual state of economic affairs ranges from 3 to 12 months, depending on the phase of the economic cycle.

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