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OECD predicts close to 4% GDP growth in 2011-2012 but deficit to remain above 3% of GDP


The Polish economy will expand by 3.9% this year and will slow only marginally to 3.8% in 2012, according to new forecasts from the Organisation for Economic Co-operation and Development (OECD). The general government deficit is projected to drop to 5.8% of GDP at the end of this year and to 3.7% of GDP in 2012, from 7.9% at the end of 2010.

In its latest Economic Outlook report released on 25 May, the OECD says the country’s economic performance will be driven by strong public investment (EU-financed infrastructure projects and Euro 2012 football championships), robust private consumption, as well as an anticipated recovery in business investment in 2012.

Nevertheless, the government must do more on the fiscal front to meet its target of bringing the deficit to 2.9% of GDP by the end of 2012, the OECD said.

Meanwhile, consumer inflation is forecast to hit 4.2% in 2011, before easing to 3.1% next year. The Organisation notes that “monetary tightening should be continued towards a neutral stance both to tame inflation expectations and forestall second round effects from the commodity price increases”. The OECD also warns that strong economic growth is likely to put growing pressure on productive capacity going forward, potentially pushing up inflation.

As for other countries of Central and Eastern Europe, the Czech economy is predicted to expand by 2.4% this year and by 3.5% in 2012, Slovakia’s by 3.6% and 4.4%, and Hungary’s by 2.7% and 3.1%.

GDP in the eurozone is projected to rise by 2% in both 2011 and 2012.

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