Deflation good for Poland

The economy in most of Europe is stagnant, even Russia feels the pinch from economic sanctions and slumping prices for their exported oil. But, consumers in Poland are finding more money in their pockets. That's due to lower prices, from the cost of filling up the car to outlays for weekly shopping. Poland's annual inflation numbers came in below zero throughout the second half of last year.

As domestic Polish spending spurs business activity, the job market has been very good with unemployment numbers dwindling and wages rising, which in turn makes them willing to splash more cash. This positive cycle is a change from recent years, when a credit shortage and government austerity made companies reluctant to hire.

Despite all the talk of deflation risks, so far it looks like deflation boosted real wages and falling oil prices are providing a further boost to household disposable cash.


In the past exports were the main driver of economic prosperity in Poland. Now that most western countries have had a slow down and aren't buying many imports, domestic demand, consumer spending and increases in business investment provide the majority of support to growth in the Polish economy.