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The Warsaw Voice » Business » September 3, 2008
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Economy Slows to a Canter
September 3, 2008 By L.Ż.    
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The Polish economy is showing signs of slowing down although it remains bullish. The country's gross domestic product (GDP) is on track to grow 5.5 percent this year, having risen 5.6 percent during the second quarter, according to the Gdańsk Institute for Market Economics (IBnGR).

Growth is expected to taper off a little during the second half of the year, with 5.6 percent predicted for the third quarter and 5.3 percent for the fourth. This trend is expected to continue into 2009 when Poland's GDP is projected to expand by 5.1 percent.

Domestic demand is expected to have a significant influence on GDP this year and next. The IBnGR is predicting a GDP growth of 6.2 percent during the third quarter of the year and 6.6 percent during the fourth to clock in at 6.4 percent for 2008 before stepping up the pace to hit 7.5 percent for 2009.

A temporary worsening of business sentiment may lead to a short-term downturn in investment growth this year, experts say. The IBnGR is predicting investment to grow 13.3 percent this year before taking off to break 17 percent in 2009. The business community remains convinced that the economic slowdown will be relatively mild and short-lived.

This year and next should see the labor market continue to pick up, although nowhere near the extent it has been over the last couple of years. The IBnGR predicts unemployment to stay in the single digits, falling to 9.1 percent by the end of the year and 8.2 percent by the end of next year. Many industries will continue to suffer from a lack of skilled workers, although people returning from abroad should alleviate the situation somewhat.

Inflation is expected to remain the bugbear of Polish growth over the next few quarters. The IBnGR is predicting a year-on-year rise of 4.3 percent in December this year, followed by 3.5 percent in December next year. It is therefore highly likely that interest rates will continue to rise.

The IBnGR is also predicting the zloty's ascent against the euro and the dollar to level off this year and next.
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