The Polish WIG 20 and Polish GDP

A Quinnipiac Economic Research Team Report

By Jack French[1] and Chris Ball[2] (ed.)

Executive Summary

This report focuses on the degree to which stock market performance is a meaningful indicator in Central European economies of their real GDP performance. We present simple correlation coefficients to indicate the relationship between stock market indices and real GDP over time in each country. Since stocks and GDP generally rise over time, we detrend each time series first, focusing our analysis on the correlations between the fluctuations of stocks and the fluctuations of GDP around trend. This report focuses on Poland’s key stock index, the WIG 20.

For more CEE countries and further data analysis, see our entire report “What do Central European Stock Markets Tell Us About GDP?


Poland’s correlation (see Table 1 at bottom of report) is clearly the lowest of the group. At 0.0954, it indicates a near zero correlation between real GDP and the Polish WIG 20 index. That is, these two data series appear essentially unrelated in Poland. This result can be seen by looking at the two time series (graph above) as well. Until 2007, the two series moved opposite one another, then both decline until about 2012. Following a period of declining GDP and flat stock performance, the two seem to reach new steady levels and co-move to some extent. Both are relatively flat and show a dip around 2015-17. But, for the two series as a whole, the overall pattern is a loose connection at best.

The key lesson for Poland, then, is that it is not safe to view weekly movements in the Polish WIG 20 as providing any indication of underlying real GDP. Our stock reports at InvestCEE will continue to include the Polish WIG 20 since it is informative in determining if there are common regional shocks versus country-specific shocks. But this too must be interpreted with caution since fundamentally the Polish stock market seems to be reflecting economic fundamentals in a different way than markets in other countries. As a final note, this could in part be due to the fact that the WIG20 only includes 20 Polish stocks and therefore suffers from small sample biases. While the WIG20 seems to be the preferred index to watch for Poland, perhaps a broader index would better indicate underlying real GDP performance.


As a stark contrast from Poland, the correlation for the USA is the highest of the group at 0.893. This indicates that the S&P 500 and real GDP move together quite closely in the United States. Visually one can also see the tight correlation in the graph to the right of the entire data series. It looks like the relationship tightened after 2004 and has remained tight ever since.

The United Kingdom’s FTSE correlation is also relatively high at 0.704. Again, this is visually born out in the graph on the right for the whole time period. As a visual lesson, one can see that the US series are a little tighter than the UK series, confirming the higher correlation for the US.

For both countries, the implication is that watching the stock markets is a fairly safe means of getting a glimpse at likely real GDP performance.

The rest of the Central European economies are somewhere in between as seen in Table 1 below. For more CEE countries and further data analysis, see our entire report “What do Central European Stock Markets Tell Us About GDP?

[1] Primary Author. Jack French is a member of the Quinnipiac University Economic Research Team.

[2] Secondary Author. Prof. Chris Ball is the director and advisor of the Quinnipiac University Economic Research Team.

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