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The Warsaw Voice » Business » May 28, 2013
Business & Economy
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No Spring Revival
May 28, 2013   
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This year, spring came to Poland unseasonably late. It was not until May that nature began to wake up from its winter slumber. Unfortunately, there are no signs of a spring revival in the Polish economy, which has clearly decelerated in the last several months. The result is a deteriorating outlook for Poland’s economic growth.

In its spring economic forecasts, the European Commission predicts that Poland’s GDP will grow by only 1.1 percent this year, a figure half that adopted by the government in its budget targets. The only optimistic projection is that the Polish economy is expected to grow 2.2 percent next year. According to European Commission experts, the growth prospects of the Polish economy this year are weakened by sluggish domestic consumption, reduced investment and decreased exports.

The European Bank for Reconstruction and Development (EBRD) has an only slightly better forecast for Poland; in May it revised downward its projection for Poland’s 2013 GDP growth to 1.2 percent from the 1.5 percent projected in January. Similarly, the International Monetary Fund has downgraded its forecast for Polish GDP growth this year to 1.2 percent from the 1.7 percent it projected in January.

It is small consolation that most other European Union countries are expected to fare even worse. Only a few economies are expected to grow faster than Poland, and some will find themselves mired in recession.

The downgraded forecasts for Poland are largely due to gloomy macroeconomic indicators across Europe, particularly less optimistic GDP growth forecasts for eurozone countries, which are Poland’s key trading partners. And it is obvious that without an improvement across the EU it will be difficult to jump-start the Polish economy.

So far the country’s rate-setting Monetary Policy Council (RPP) has been the most active in efforts to help the economy along. In May it cut interest rates yet again this year in an attempt to boost demand. Will this decision encourage companies to increase investment and will consumers step up their purchases? We’ll find out in a few months.
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