“The entire economy is in trouble, not just furniture manufacturers,” Maciej Formanowicz, founder and long-standing president of Fabryka Mebli Forte, told Rzeczpospolita a few days ago in an interview. To justify this pessimistic assessment, he drew attention primarily to the decline in foreign demand, which is occurring at a time of rising manufacturing costs due to higher energy prices and unprecedented increases in the minimum wage. Significantly, he did not use the word “crisis”; he rather spoke of an unstable economy.
This is a very accurate diagnosis of today’s economic reality, where recessionary phenomena coexist with phenomena characteristic of periods of prosperity. The economy (not only ours, by the way) is responding atypically, which puts many entrepreneurs in a new situation. And that which is unknown raises concerns. Under such circumstances, the common voices claiming that Poland is on the verge of some kind of a crisis are understandable. However, what the founder of Forte meant is precisely what can be described, without exaggerating, that the economy is unstable.
Intricacies of the statistics
Let’s start with recessionary phenomena. In the second quarter of this year, real GDP, the broadest measure of activity in the Polish economy, decreased by 2.2% as compared to the first quarter, when — in contrast — it increased by 1.6%. This is data that has been stripped of the influence of seasonal factors that have been subject to a fair amount of revision recently (which as such indicates a breakdown in seasonal patterns, i.e., the economy has just become unstable).
The trend, however, is quite clear: GDP (real, i.e., counting under the assumption of constant prices) is today at around 3% lower than in Q1 2022 when it reached a historic peak. In other words, that is how much less is produced in Poland today. One can argue about the definition, but such a prolonged decline in activity in the economy at least resonates with the term “recession”.
Due to the aforementioned difficulties of the Statistics Poland related with sifting seasonal fluctuations from actual trends, as well as the difficulty in monitoring all prices in the economy at a time of their unprecedented fluctuations, which is needed to make GDP more realistic, this indicator is easy to underestimate today. However, monthly figures for industrial and construction production, retail sales, and exports show us a similar picture.
