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Brussels: Poland to see growth of 2.7% in 2012


The European Commission has raised its outlook for economic growth in Poland in 2012 to 2.7% from 2.5%, according to its Spring forecast 2012-2013 report released on 11 May. The Polish economy is expected to perform better than any other country in the EU this year, with the EU as a whole forecast to show zero growth and the eurozone to slip into recession with a 0.3% decline in its GDP.

In the report, Brussels notes that the Polish economy is set to slow down considerably this year from an estimated 4.3% in 2011 due to deteriorating global demand and continued fiscal consolidation measures, and while domestic demand will remain the main driver of growth, the focus will continue to shift from consumption to private investment. Whereas private consumption is likely to decelerate on the back of sluggish wage growth and declining consumer credit, gross fixed capital formation is expected to remain strong as companies take advantage from a weak currency to renew their machinery ahead of an expected upturn. At the same time, government investment and consumption are expected to stabilise this year. In 2013 public consumption is projected to rebound, but investment will decrease sharply from a peak in the run up to Euro 2012 in June.

As for foreign trade, both exports and imports are expected to slow down in 2012, but the contribution of net exports is to increase slightly as export growth outpaces import growth, helped by a weak currency. (The situation will go into reverse in 2013, however, as recovery in private domestic demand boosts imports.)

By way of comparison, in Slovakia GDP growth is forecast to slow to 1.8%, in the Czech Republic to 0%, while Hungary is expected to slip back into recession (-0.3%). So is Estonia (-1.8%), while in Latvia and Lithuania growth is projected to decelerate to 2.2% and 2.4%, respectively.

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