Expanding Consumer Credit Underpins Spending in Poland

Growing consumer lending as a result of the easing of credit restrictions is boosting consumer expenditure in Poland. The country’s strong domestic market helped its consumer expenditure to rise throughout the 2006-2011 period, making the Polish economy one of the top performers in Eastern Europe and the European Union. However, exchange rate fluctuations and high inflation are among the risks presented by significant public indebtedness.

Outstanding Balance of Consumer Lending by Category in Poland: 2006-2013



Source: Euromonitor International from national statistics/trade sources

Note: Data are in constant 2011 prices; Data for 2012 and 2013 are forecast.

  • Consumer credit in Poland expanded strongly in August 2012, up PLN183 million (US$58.7 million) on the month before. The increase in consumer lending came primarily as a result of banks easing borrowing restrictions, and the country’s banking sector regulator plans further moves in this direction. Seasonal borrowing fluctuations were also a factor. The move marked a shift in attitude from lenders, after a tightening of consumer credit conditions in the second quarter of 2012;
  • A boom in consumer credit helped underpin household spending, which saw Poland’s economy hold up well against the ravages of the global economic crisis and sovereign debt crisis, outperforming many of its more advanced fellow EU states. Over 2006-2011 consumer expenditure in Poland grew by 19.0% in real terms, against a 16.0% hike in real terms in total disposable income during the same period. However, increased levels of indebtedness can leave borrowers vulnerable to unforeseen economic shocks and exchange rate fluctuations.


  • Increases to the maximum loan size were cited by a fifth of banks surveyed by the National Bank of Poland in its third quarter 2012 report as a factor in the greater uptake of consumer credit. Easy access to large loans allows households to devote money to discretionary expenditure categories, and fast-track the acquisition of high-value goods and services, for which they would otherwise have to save up, deferring the purchasing moment. The fastest growing consumer expenditure category over 2006-2011 was communications, which posted a growth of 29.4% in real terms, as Poles snapped up smartphones, laptops and other gadgets thanks to the option of spreading the cost over a longer period;
  • However, the increase in consumer loans is not without risk. Poland’s rate of inflation fluctuated during 2006-2011, going from 1.1% in 2006 to 4.2% in 2011. Rising inflation prompts lenders to raise interest rates, and the resulting hikes to repayments cut into borrowers’ disposable incomes, driving them to curb spending elsewhere, especially on discretionary items;
  • Polish borrowers are also at the mercy of currency exchange fluctuations. Home buyers who took out mortgages denominated in the Swiss franc were burnt when the local currency, the zloty, lost value against the franc, going from a period high of PLN2.2 per CHF in 2008 to PLN3.3 in 2011. This plunged hundreds of thousands of mortgage holders into negative equity, leading to increased defaults and muted consumer spending, due to the decrease in perceived wealth. Poland’s financial regulators have mitigated this risk by advising banks to ditch foreign currency loans;
  • A reliance on consumer credit suppresses the appetite for and capacity to save. Poland’s savings ratio sank from 5.8% of disposable income in 2006 to 3.4% in 2011. While this has a positive short-term impact on consumer expenditure, it can leave households without a financial buffer in the event of sudden dips in disposable income.

Annual Consumer Expenditure and Savings Ratio in Poland: 2006-2015


Source: Euromonitor International from national statistics/Eurostat/UN/OECD

Note: Data are in constant 2011 prices; Data for 2012 and 2013 are forecast.


  • Consumer expenditure will continue to grow, albeit at slower rates of 0.9% year-on-year in real terms in 2012 and 1.0% year-on-year in real terms in 2013;
  • Consumer expenditure will continue to support the strong domestic market, which is credited with helping Poland avoid the fallout of wider European economic woes. Euromonitor International forecasts Poland’s GDP will grow by 2.7% in real terms in 2012, making it the most dynamic EU member state. The pace will pick up, with projected annual real GDP growth increasing from 2.7% in 2013 to 3.9% in 2015. This will feed through into higher earnings that will facilitate further consumption, creating a virtuous circle. The growth will consolidate Poland’s position as the second largest consumer market in Eastern Europe, behind Russia;
  • However, Poland is facing challenges including reducing its public deficit, improving its infrastructure, deficient financial markets and a low labour force participation rate. Bumps in the road ahead could dent consumer confidence, which may persuade Polish borrowers to pay down debt and take a more prudent approach to their personal finance by prioritising saving, thereby putting a brake on consumer expenditure.