Forecasts Too Optimistic?
April 30, 2014
According to the International Monetary Fund, the future looks bright for the Polish economy. The IMF’s latest forecast, released in April, suggests Poland’s GDP will grow 3.1 percent this year. This marks a major improvement over October, when the IMF predicted that the Polish economy would expand by 2.4 percent in 2014. The IMF’s projections for next year are even more optimistic, putting Poland’s 2015 GDP growth at 3.3 percent. This would mean that Poland will once again be one of the fastest growing economies in Europe.
The Polish economy is revving up mainly because people are buying more goods and services, and interest rates have been kept low. Consumers prefer to spend their money instead of keeping it in low-interest bank deposits or investing it. According to IMF experts, the Polish labor market is also improving and EU funds are expected to lend the Polish economy a fresh impetus.
Forecasts for the global economy are also more optimistic. In its World Economic Outlook report, the IMF estimates that the global economy will rebound in the next two years, mainly thanks to a recovery in developed countries. This year, global GDP growth is expected to pick up to 3.6 percent, followed by 3.9 percent in 2015.
At the same time, the IMF warns that, despite the improvement, the global recovery is still fragile and there is a significant risk that the situation might worsen. Among the biggest risks, the IMF lists rising geopolitical tensions related to developments in Ukraine. The IMF cautions that the crisis could have implications extending well beyond the region, if, for example, it leads to disruption in trade and finances as a result of intensified Western sanctions and retaliatory measures taken by Russia. The biggest impact may come from serious disturbances in the production or transportation of natural gas or crude oil.
It is not difficult to predict that Poland, which is dependent on Russian energy sources, would be among countries that would suffer the most if economic sanctions were introduced against Russia. And economic growth forecasts for Poland this year could then prove to be too optimistic.
This is why efforts to improve Poland’s energy security, through measures such as diversification of energy imports, are so important. For now, however, little is being done in this area other than talk and rhetoric.