Lewiatan Business Index drops two points in August

2010-09-06

The annual PKPP Lewiatan Business Index shed two points to 41 in August, the Polish Confederation of Private Employers (PKPP) Lewiatan announced. The quarterly index lost one point to stand 42. According to PKPP experts, the readings point to a stabilisation of the rate of economic expansion rather than its further improvement.
In its commentary, the Confederation noted that despite GDP growth in Q2 higher than market expectations, the factors contributing to it seems to be weakening. Improvement on the labour market strengthened consumption tendencies, but still high unemployment hinders a further rise in wage bill. Growth in demand, including from abroad, helped boost inventories and imports, thereby generating a negative contribution to GDP growth in terms of net exports. The situation may be worsened by the appreciation of the zloty and a possible weakening in foreign demand as a result of a more restrictive fiscal policy. Moreover, despite the fact that enterprises posted good results, domestic companies invest less. Conversely, there was a significant increase in foreign direct investment inflows into Poland in comparison with the corresponding period of the previous year, and this was despite the high budget deficit and the rising public debt.
The PKPP Lewiatan Business Index is constructed on the basis of market prognoses prepared by Poland’s leading economists for the current quarter, half year and full year. It is measured on a 100-point scale, where a score of 50 corresponds to an economic growth forecast of 3-3.5% of GDP annually.