Savings of institutional sectors in Poland

This paper documents the trends and determinants of domestic savings in Poland after transition to the market economy in 1990. We analyze the changing structure of savings created by institutional sectors in Poland (non-financial corporations, financial corporations, general government, households, non-profit institutions serving households) and net lending to the national economy from the rest of the world.  The question was how the restructuring and growth of Polish economy was financed in the period following the transition in 1990, influenced additionally by Poland’s accession to the European Union in 2004 and by global financial crisis since 2007. The examination of domestic savings in Poland reveals two trends: increase in the relative importance of the corporate sector in total savings, and decrease in the share of households in domestic savings caused by a faster growth of disposable income of other sectors of the economy than that of the households’. The analysis of the effects of the European funding and of financial crisis on domestic savings brings ambiguous results. Firstly, capital transfers from the European Union to Poland after 2004 had neither positive nor negative effects on the saving rates of households and of the corporate sector. Secondly, during the financial boom at the market for securities and real estate the net property income of households and of the non-financial corporate sector did not rise in relation to disposable income of these sectors. Thirdly, saving rates of the non-financial corporate sector were almost stable in relation to GDP between 2004-2008. Lastly, the macroeconomic savings of the households’ sector fell only in 2008 when net wealth of Polish households in obligatory pension funds and in other securities decreased. Our microeconomic analysis shows that household savings from current disposable income were rising during the financial crisis of 2007-2010 due to a growing income inequality among households in Poland. We conclude that the growth of the economy, income inequality and the social security system are the main determinants of the saving rates of institutional sectors in Poland.