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European Commission predicts marginal slowdown of GDP growth in Poland in 2012


Economic recovery in Poland will moderate somewhat in 2012, and despite substantial progress in deficit reduction the country will fail to bring its general government deficit below 3% of GDP by the end of next year, the European Commission says in its latest interim economic forecast. Brussels also revised upwards its estimate of inflation in Poland in 2011 and 2012.

The Commission expects economic growth in Poland to accelerate to 4% this year, helped by a recovery in private investment, before easing back to 3.7% in 2012, due to weaker growth of consumption and public investment. Nevertheless, real GDP growth is projected to remain close to potential and well ahead of the EU average, supported by a further strengthening of private investment and improvement on the labour market.

Just three EU countries are projected to achieve faster GDP growth than Poland this year (Estonia, Lithuania and Sweden), and five in 2012 (Estonia, Latvia, Lithuania, Luxembourg, Slovakia). The Czech economy is forecast to expand by 2% in 2011 and 2.9% in 2012, Slovakia's by 3.5% and 4.4%, and Hungary's by 2.7% and 2.6%. The growth forecast for the EU as a whole is 1.8% and 1.9%, while for the eurozone 1.6% and 1.8%.

The strong pace of economic growth coupled with fiscal consolidation measures are expected to bring about a measurable reduction in Poland's deficit and debt levels, though not nearly as deep as predicted by the government. Thus, general government deficit is forecast to fall to 5.8% of GDP at the end of 2011 and to 3.6% at the end of 2012, from 7.9% last year. General government debt, which hit 55% of GDP in 2010, is projected to peak at 55.4% this year, before falling back to 55.1% in 2012.

At the same time, the country’s HICP inflation is expected to surge to 3.8% in 2011, and to slow to 3.2% in 2012.

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