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The Warsaw Voice » Business » June 27, 2013
Business & Economy
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June 27, 2013   
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Various international institutions have released economic forecasts that have been rather harsh on Poland in recent weeks. First, the International Monetary Fund suggested that Poland’s economy will grow by no more than 1.2 percent this year. Then the European Commission revised downward its forecast for Poland’s 2013 GDP growth to 1.1 percent. Finally, the Organization for Economic Cooperation and Development (OECD) went public with a report that estimates that Poland’s economy will expand by only 0.9 percent this year.

These predictions are worse than any of those offered by international institutions previously. And there is no way of knowing if future reports will not downgrade these forecasts still further, especially as it turns out that the results of the first few months of the year were not the best for the Polish economy. According to the government’s Central Statistical Office (GUS), in the first quarter, Poland’s GDP grew a mere 0.5 percent. Just how dramatically the country’s economic conditions have deteriorated over the past year or so is shown by the fact that in its budget targets, adopted in September last year, the government put Poland’s 2013 GDP growth at an optimistic 2.2 percent.

According to economists, the main cause for the slowdown in the Polish economy are adverse economic trends in the international environment. The OECD predicts that the eurozone GDP, for example, will shrink by 0.6 percent this year. The Polish economy is also influenced by declining public investment, partly because of limitations in EU funds. Nor is the economy likely to be helped by attempts to reduce the budget deficit, experts say, because consumption could suffer as a result. And a drop in private consumption seems to be a realistic scenario. Households may be tempted to increase their savings due to an uncertain situation on the labor market.

Luckily, there are also some optimistic signs. There is every indication that, contrary to fears, the eurozone will not break up, thus helping prevent a deep decline in Poland’s exports. And exports, after a slump in domestic demand, are now the main driving force behind the Polish economy. It is thanks to factors including sales abroad that the Polish economy is expected to be able to avoid a recession. However, Polish companies should make efforts to diversify their export destinations because non-European markets are more dynamic and promising these days.

Despite the poorer forecasts, analysts at UK-based advisory and business analysis firm Oxford Economics still rank Poland among the 25 rapid growth markets that are expected to drive the global economy in the coming years. The Czech Republic, Russia, Turkey and Ukraine are other European economies ranked among the top 25 alongside Poland. Experts say the Polish economy still has strong fundamentals, and its other major strength is a healthy banking system. Besides Poland is still capable of attracting droves of foreign direct investors—as can be seen in league tables ranking countries in terms of investment attractiveness. Poland has been a regular among those topping the list for years.
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