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Polish Retail Sales Slowing Down, Tax Cuts May Fuel Industry
Dec 11, 2008

Retail sales in Poland witnessed a sluggish growth in October 2008 due to weakening consumer confidence led by the global financial turmoil.

Central Statistical Office of Poland said that at current prices, retail sales in Poland increased 7.9% in October 2008 on a YOY basis, down from the 11.6% increase recorded in the previous month, as reported by rttnews. However, a growth of 8.5% was expected for October 2008.

As per the type of enterprise activity, other retail sales in the non-specialized stores posted a growth of about 23.2% in October 2008. It was followed by a 22.4% increase in garments, textiles and footwear retail sales and 21.4% rise in household appliances and furniture retail sales. At current prices, retail sales rose 3.8% in October 2008 as compared to 1.8% growth registered in the previous month while they were expected to go up by 5.3%.

The slowdown in the Polish retail sales was mainly due to weakened consumer confidence in view of the worldwide financial turmoil. This limited the purchasing power of consumers to necessary things only. However, the figures are not much significant as the retail industry is already having a series of data indicating a slowing economy.

Further, the Polish retail sales in October fell more than expected, triggering the speculation that the rising domestic demand will continue to propel inflation. Global economic meltdown has put considerable impact on the Polish economy. This has slowed down the retail sales and ultimately, the industrial production has suffered a set back in the past few months.

Consequently, on November 26, 2008, the central bank of Poland brought down its benchmark interest rate by 25 basis points to 5.75%, including itself to the list of emerging markets that have recently reduced their interest rates to aid their ailing economies.

Although the growth expectations seem feeble for 2009 as it has become clear that Poland will not be able to save itself from some of the impacts of ongoing crisis.

According to a Research Analyst at RNCOS, “The lower-than-expected figures of the Polish retail industry indicate that retail sales in the country are slowing down. However, the consumption, being a broader concept, is expected to stabilize the economic growth in 2009, particularly due to tax reduction. Moreover, the rising number of affluent consumers will also contribute significantly to boost the sales.”

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