Adam Oleksiuk University of W armia and Mazury

1

Adam Oleksiuk

University of Warmia and Mazury

Economic Situation and Implementation of the Cohesion Policy in Poland between 2007-2013

Budapest, April 08, 2014

2

MaMaiin dmevelopment trends in Poland:

High –compared to the EU - economic growth and progress in convergence with the EU,

Changes in the economy’s structure resulting from the cohesion policy’s implementation and from the global economic crisis: shrinking share of sector I (agriculture) and slightly declining share of sector III (services) coupled with growing share of the sector II (industry and construction)

Growth slowdown in 2012, deteriation of macroeconomic situation in numerous important spheres: economic growth, situation of public finance, labour market

Potential threats to future economic growth: weak external and domestic demand, impact of public finance’s consolidation (i.a. lower public investment)

Decline of population’s real disposable incomes in the period 2011-2012

GDP growth rate in Poland (annual changes in %)

-7,5-7,0

2,63,8

5,2

7,06,2

7,1

5,0 4,5 4,3

1,2 1,4

3,9

5,3

3,6

6,26,8

5,1

1,6

3,94,5

1,9 1,6

-10

-8

-6

-4

-2

0

2

4

6

8

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: CSO

Main development trends in Poland

In 2012 GDP per capita (at PPS) reached 67% of the EU-27 average.

Dynamic convergence vis-a-vis the EU average –faster than in all the other New Member States. The process of real convergence towards the EU was observed in all regions of Poland; however it was slower in the less developed regions

4

263

229

130

128

126

126

123

120

115

109

106

100

96 92 86 84 81 76 76 75 72 71 67 67 64 62

50 47

99

0

50

100

150

200

250

300

Luxe

mbo

urg

Irel

and

Aus

tria

Net

herl

ands

Sw

eden

Dan

mar

k

Ger

man

y

Bel

gium

Finl

and

Fran

ce

Uni

ted

Kin

gdom

EU

-28

Italy

Spa

in

Cyp

rus

Mal

ta

Slo

veni

a

Cze

ch R

epub

lic

Slo

vaki

a

Por

tuga

l

Gre

ece

Lith

uani

a

Est

onia

Hun

gary

Pol

and

Latv

ia

Cro

atia

Rom

ania

Bul

gari

a

Source: Eurosta database, access, January 31, 2014

.

GDP growth in the Central and Eastern European Countries

Sources: Own estmiate, based on Eurostat’s data base and on UNECE statistical database.

Country

1989=100

1995 1998 2000 2001 2002 2004 2005 2006 2012

Bulgara 70.2 62.4 68.9 71.8 75.2 84.7 90.1 95.9105.

5

Czech Republic 92.7 95.8101.

5 104.7 106.9 116.1 120.8129.

3138.

7

Estonia 66.0 83.4 91.2 96.9103.

3 118.4 128.9141.

9145.

0

Lithuania 55.8 67.9 75.4 80.5 85.9101.

8 109.7118.

3126.

9

Latvia 57.3 67.4 73.8 79.2 84.9 99.5 109.5121.

8117.

3

Poland 103.1 123.1 134.2 135.8 137.7 150.7 156.1165.

8209.

1

Romania 82.3 79.1 80.0 84.6 88.9101.

5 105.7114.

1123.

7

Slovakia 84.7 98.7100.

1 103.6 108.3 119.3 127.3137.

8168.

4

Słovenia 88.8100.

0 109.8 113.0 117.3 126.0 131.1138.

7140.

7

Hungary85.5 91.9 98.9

102.5 107.1 116.6 121.3

126.0

120.0

6

Main development trends in Poland

Relatively high rate of economic growth, compared to the EU averageAverage annual rate of growth in the period 2007-2012 amounted to 4% (as against the EU-27 average of 0.4%)Economic slowdown in 2012 and in 2013; GDP increased by respecitvely 1.9% and 1.6% (4.5% in 2011).

GDP growth rate (%) in Poland and in the EU (q/q-4) i

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0 UE-27 (SA) Polska (SA)PolandEU-27, average

7

Development trends in Poland

Slowdown in domestic demand observed in 2012 – very low growth in consumption, coupled with fall in accumulation (including gross fixed capital formation).

In the period 2009-2012, expenditures on gross fixed capital formation recorded growth only in 2011, while the consumption growth has been slowing since 2010

-15,0

-10,0

-5,0

0,0

5,0

10,0

15,0

20,0

25,0

Gross Fixed Capital Formation GDP Total consumption

Growth (in %) of selected GDP components in the period 2007-2013 (q/q-4)

8

Development trends in Poland

Investment rate declined from 20.2% in 2011 to 19.4% in 2012, with the simultaneous decline in public investments from 5.7% of the GDP to 4.6%

The Convergence Programme 2013 forecasts decline in infrastructural investment- at both central and self-government level - from 3.8% in 2013 to 3.5% in 2014

18,1 18,219,7

21,6 22,3 21,219,9 20,2 19,4

3,4 3,4 3,9 4,2 4,6 5,2 5,6 5,7 4,6

0,0

5,0

10,0

15,0

20,0

25,0

2004 2005 2006 2007 2008 2009 2010 2011 2012

%

stopa inwestyjcji ogółem stopa inwestycji publicznych

Investment rate (% of GDP)

Total investment rate Public sector’s investment rate

Employment rate in EU-28age group 20-64 in 2012 (in %)

Source: Eurostat Database, accessed February 27, 2014

79

,4

77

,2

76

,7

75

,6

75

,4

74

,2

74

,0

72

,1

71

,5

71

,4

70

,2

69

,3

68

,5

68

,4

68

,3

68

,1

67

,2

66

,5

65

,1

64

,7

63

,8

63

,7

63

,1

63

,0

62

,1

61

,0

59

,3

55

,4

55

,3

50

55

60

65

70

75

80

85

Sw

eden

Net

her

lan

ds

Ger

man

y

Au

stri

a

Den

mar

k

Un

ited

Kin

gd

om

Fin

lan

d

Est

on

ia

Cze

ch R

epu

blic

Lu

xem

bo

urg

Cyp

rus

Fra

nce

Lit

hu

ania

EU

-28

Slo

ven

ia

Lat

via

Bel

giu

m

Po

rtu

gal

Slo

vaki

a

Po

lan

d

Ro

man

ia

Irel

and

Mal

ta

Bu

lgar

ia

Hu

ng

ary

Ital

y

Sp

ain

Cro

atia

Gre

ece

Harmonised unemployment rate in EU-28(December 2013, in %)

4,8 5,2 6

,1 6,4 6,9

6,9

6,9 7,2 7,3 8

,0 8,4

8,4 9,0 9,5 9,9 10

,2

10

,8

10

,9

11,3

12

,0

12

,3

12

,7

12

,9 14

,0 15

,5 17

,3 18

,6

26

,7 27

,8

0

5

10

15

20

25

30

Au

stri

a

Ge

rman

y

Lu

xem

bo

urg

Ma

lta

Den

mar

k

Net

her

lan

ds

Cze

ch R

epu

bli

c

Un

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Kin

gd

om

Ro

man

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Sw

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en

Fin

lan

d

Bel

giu

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ia

Hu

ng

ary

Slo

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EU

-28

Lit

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La

tvia

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and

Ita

ly

Bu

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ia

Slo

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a

Po

rtu

gal

Cyp

rus

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Sp

ain

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11

Main development Trends in Voivodeships (NTS-2 regions)

Progress in convergence with the EU is more pronounced in economically leading voivodeships (mazowieckie, dolnośląskie, wielkopolskie)

The highest values of Local Human Development Index (health, education, affluence) are observed in highly developed voivodeships (mazowieckie, małopolskie, pomorskie), while the most dynamic progress in this area in the years 2007-2010 was recodred in lubuskie and łódzkie voivodeships.

Differentiated situation in voivodeships – higher economic growth in the most developed regions, coupled with growing investment rate in economically weaker ones

Deterioration of situation in many labour market segments– youth unemployment and long-term unemployment in rural areas and in areas distant from large urban centers

Worsening net balance of internal migration in many peripheral eastern, central and northern areas

Progress in improving the communication accessibility of regional centers and in the quality of technical infrastructure.

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Convergence of voivodeships towards the EU

In 2011 GDP per capita (at PPS) ranged from 44 % of the EU-28 average (in lubelskie and podkarpackie) to 107% (in mazowieckie voivodeship). In 2010 the ratio ranged from 42%

(podkarpackie) to 102% (mazowieckie). In the period 2004-2011 the GDP per capita in mazowieckie voivodeship has increased in relation to the EU-28 average

by 31p.p., while lubelskie, warmińsko-mazurskie, podkarpackie and zachodniopomorskie have narrowed the distance towards the EU-28

average by 9 p.p.

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Registered unemployment at NUTS-3 level

High long-term unemployment in Eastern Poland

Differentiation at the NTS 3 level

legnicko-głogowski

bydgosko-toruński

lubelski gorzowski

m. Łódź

m. Kraków

m. Warszawa

opolski rzeszowski białostocki

trójmiejski tyski

kielecki olsztyński

m. Poznań

m. Szczecin

wałbrzyski grudziądzki

puławski

zielonogórski

sieradzki nowosądecki

radomski nyski

przemyski łomżyński gdański

bytomski sandomiersko

-jędrzejowskełcki

pilski stargardzki

0

50

100

150

200

250

300

350

max min average

IN 2010 GDP per capita of NUTS-3 units in relation to the national average ranged from 53.2% in przemyski subregion (podkarpackie voivodeship) to 301.1% in Warsaw (differentation rate of 1:6).

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GDP per capita in subregions (NUT- 3) in 2010 ( Poland=100), in %

Entrepreneurship, investments, expenditures of innovative activity

• Highly differentiated development potential of the entreprise sector across the country

• Investment outlays are incurred mostly by enterprises located in subregions where economic activity is concentrated in large urban centres.

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Expenditures on innovative activity

• Significant regional concentration – in 2012 almost 40% of expenditures on innovative activity were incurred in enterprises located in the mazowieckie voivodeship, whille close to 14% in śląskie voivodeship

• Services sector – 78.4% of expenditures on innovative activity incurred by enterprises from the mazowieckie voivodeship

• Industrial sector – almost 70% of innovative activity originates in 5 voivodeships: śląskie (19.3%), mazowieckie (18.8%), łódzkie, wielkopolskie and dolnośląskie

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Research & Development Expenditures

• High concentration - in 2011 4  voivodeships (mazowieckie, małopolskie, śląskie and vielkopolskie) responsible for 67% of the said expenditures.

• Highest R&D expenditures per 1 person employed in the R&D sphere recorded in mazowieckie voivodeship (PLN 125 thousand-i.e. 43.8% higher than the national average). 2nd place of świętokrzyskie voivodeship, with podkarpackie and warmińsko-mazurskie ranked 3rd and 4th. kujawsko-pomorskie placed last (with expenditures almost two times lower than the national average)

• In 2010 the largest share of regional GDP was earmarked for financing R&D activity in mazowieckie (1.35%), małopolskie (1.05%) and podkarpackie (0.97%)

• In case of Eastern Poland situation is not uniform. The share of said expenditures was quite significant in podkarpackie voivodeship (where i.a. the so-called Aviation Valley is located) and in lubelskie (0.67%) where the dynamic academic center is located. However, in warmińsko-mazurskie and in świętokrzyskie the said share amounted to 0.45 i 0.47% of regional GDP, while in  podlaskie it stood at mere 0.32% of the region’s GDP 17

Road infrstructure

• Despite high value added and positive network effects generarated by highways and expressways across the country, at the local level construction of such categories of roads is necessary but not sufficient to assure the rapid grwoth of gminas and powiats. The said growth is determined by a wider set of factors. The demand effect related to the investment process was significantly lower than expected.

• According to the Ministry of Transport, at the end of 2012 there were 1365,1 km of highways (as against 205 km in 2009) and 2052,4 km of expressways (as against 225,6 km in 2003.

• Simultanenous lack of expressways and of highways is one of the reasons of low transport accessibility of podlaskie, podkarpackie and warmińsko-mazurskie voivodeships. There are also bottlenecks (low share of highways and expressways in mazowieckie voivodeship.

18

Bez okna

Network of highways and expresswaysin Poland

Source: GDDKiA, MRD (August, 2013)

Network in operations

higwaysexpresswaysother roads

Roads and highways co-financed with the EU resources in the period 2007-2013

higwaysexpresswaysother roads

Condition of public finance

• Deficit of the entire general government sector, as well as the deficit of the self-government units has narrowed in 2011, for the first time since 2008

• This positive trend, particularly strong in the case of self-governments, was maintained in 2012, with the deficit amounting to 3.9% of the GDP (that is 1.1 p.p. lower than in 2011)

• Such a level of the deficit places Poland on the 15th position in the EU (where the average was slightly higher – 4% of the GDP).

19

Germany

EstoniaSweden

Luxembourg

Bulgaria

Latvia

HungaryFinland

Austria

Romania

ItalyLithuania

Malta

Belgium

Poland

DenmarkEU-27

Slovenia

Netherlands

Slovakia

Czech RepublicFrance

Cyprus

United Kingdom

PortugalIreland

Greece

Spain

-12,0 -10,0 -8,0 -6,0 -4,0 -2,0 0,0 2,0

20

Territorial structure of the UE funds allocation

•High pace of the EU funds’ allocation and implementation in Poland.

• In the period 2010- June 30 2013 - 86.5% of the 2007-2013 allocation was alloted to specific projects;

•The highest EU co-financing per capita was observed in: warmińsko-mazurskie (PLN 8967), podkarpackie (8840 PLN) and mazowieckie (7530 PLN);

•The lowest amount of per capita co-financing was recorded in: kujawsko-pomorskie (PLN 4372), wielkopolskie (PLN 4644) and opolskie (PLN 5054) voivodeships

•Significant focus of the EU financing in capital subregions of voivodeships. In the majority of voivodeships EU funds in the said regions amount to almost half (or even more) of expenditures incurred in a given voivodesh

•Sizeable internat differentiation in terms of EU co-financing per capita

m.Wrocław

bydgosko-toruński

lubelski

gorzowski

sieradzki tarnowski m.Warszawa

opolski

rzeszowski

białostocki

trójmiejski

gliwicki

kielecki

elbląski

m.Poznańszczeciński

wałbrzyski grudziądzkichełmsko-zamojski

zielonogórskim.Łódź

nowosądeckiradomski

nyskikrośnieński

suwalskisłupski

rybnicki

sandomierski

ełcki

pilski

koszliński

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

max min średnia w województwie

In the podkarpackie, śląskie and dolnośląskie voivodeships sub-regions leading in the implementation of the cohesion policy, received over 3.5 times more financing than the regions with the lowest co-financing levels. Among the NUTS-3 units, the Rzeszów subregion stands out as a leader - with the EU co-financing per capita reaching almost PLN 15 thousand (over two times higher than the national average of PLN 6354). The lowest degree of internal differentiation in this field is observed in: opolskie, kujawsko-pomorskie and lubuskie voivodeships.

21

Territorial structure of the UE funds’ allocation

There is a visible concentration of EU expenditures in the central-eastern belt, as well as in the Western part of the country – the areas where the S7, S8 and S3 expressways, A1 i A4 highways and the modernized railway Warszawa – Gdynia are located

In the majority of areas characterized by the highest concentration of the EU support, there were large infrastructural investments implemented (mostly in raliways and road infrastructure), amounting to half of the value of projects implemented in those areas.

22

Territorial structure of the UE funds allocation

Thank you for attentionThank you for attention