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JP Morgan upgrades growth forecast for 2012


JP Morgan has raised its forecast of economic growth in Poland in 2012, reflecting better-than-expected macroeconomic performance during the first two months of the year. The US investment bank now expects the Polish economy to expand by 3% in 2012, up from 2.7% as previously projected.

According to JP Morgan, the level of economic activity and orders in January, as well as surveys of economic conditions conducted during February, suggest economic growth in Q1 is likely to be 2.75% y-o-y, rather than 2% y-o-y. GDP growth is expected to slow in Q2 due to weaker external demand, particularly in Germany, and the government’s fiscal consolidation programme. Public investment will decrease after Euro 2012, but it is too early to say whether private investment will fill the gap. Even so, any slowdown is set to be only gradual, and the Monetary Policy Council (RPP) is unlikely to lower interest rates earlier than in Q3. The extent of the anticipated monetary loosening in the course of 2012 will also be smaller than previously thought, by 50 basis points rather than 75 points, JP Morgan reckons. Furthermore, rising oil prices raise the possibility that inflation will take longer to return to the target, which could rule out rate cuts even if the economy stalls.

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