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Goldman Sachs cuts growth forecast for Poland


Goldman Sachs has revised downward its forecast of economic growth in Poland in 2011 and especially in 2012. The US investment bank now expects the Polish economy to expand by 4.1% this year, only slightly lower than previously forecast 4.2%, helped by a strong first half of the year and resilient domestic demand, which should cushion the impact of weaker external conditions in the remainder of the year. However, growth is set to slow down more significantly in 2012 as deteriorating performance in the eurozone is compounded by the impact of the government’s fiscal consolidation measures. As a result, Poland’s GDP will grow by 3.8% in 2012, against an earlier projection of 4.2%. This means that the likelihood of the government fulfilling its target of bringing the general government deficit below 3% of GDP in 2012 is more remote than before, even though the deficit for 2011 is likely to be 0.2 p.p. lower than officially projected, at an estimated 5.4% of GDP, Goldman Sachs said.

The US bank also predicts a sharper deceleration in price growth in the remainder of 2011 and in the course of 2012, with inflation projected to be 4% at the end of this year, down from 4.2%, and to fall to 2.5% by the end of 2012, down from 2.7%. Goldman’s baseline scenario assumes that the Monetary Policy Council (RPP) will refrain from changing interest rates throughout 2012.

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