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Brussels: Poland to show fastest GDP growth in 2012


2012-02-24



Poland will be the best-performing EU economy in 2012 with GDP growth of 2.5%, even as the Union as a whole stagnates and the eurozone undergoes a mild recession, the European Commission says in its latest Interim Forecast report released on 23 February. While the new forecast for Poland is the same as in the Commission’s autumn report, the outlook for the EU and for the eurozone has been adjusted downwards and the number of Member States projected to experience negative growth this year has been extended to nine from two.

Brussels expects quarterly real GDP growth in Poland to stabilise at around 0.5% q-o-q over this year, as deteriorating labour market conditions and weakening consumer confidence dampen private consumption growth. Wage growth will be eroded by a wage freeze in the public sector and an increase in non-tax labour costs, and rising prices will eat into purchasing power. At the same time, investment growth is expected to remain strong, driven mainly by recovering private investment, but also by public infrastructure projects ahead of Euro 2012. Furthermore, net exports are forecast to make a significant positive contribution to GDP growth this year as Polish exporters continue to benefit from a weaker zloty and a favourable sectoral structure of exports. The country's HICP inflation will slow steadily to around 3% at the end of 2012, but its high level at the beginning of the year means average inflation will be in the region of 3.5%, the Commission reckons.

By way of comparison, the EU as a whole is projected to show zero growth this year and the eurozone to contract by 0.3%. As for other countries of Central and Eastern Europe, Slovakia is forecast to grow by 1.2%, the Czech Republic is to experience zero growth, while Hungary is expected to slip back into recession with negative growth of 0.1%. Lithuania and Latvia are the only EU countries apart from Poland forecast to achieve growth of above 2% (2.3% and 2.1%, respectively). Estonia is expected to grow by 1.2%.



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