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The Warsaw Voice » Business » December 13, 2015
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Upbeat Forecasts
December 13, 2015   
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Poland remains at the forefront of countries with the fastest economic growth in Europe. And the indications are that this will continue to be the case in the next few years.

In its autumn economic forecast released in November, the European Commission put Polish GDP growth this year at 3.5 percent. It also suggested that the country’s gross domestic product would grow at the same rate next year and in 2017. Earlier, in its spring forecast, the European Commission predicted that the Polish economy would grow 3.3 percent this year and 3.4 percent in 2016.

According to European Commission experts, the Polish economy boasts stable economic growth supported by domestic demand, labor market improvements and real wage growth. Another significant factor is the country’s growing exports to other EU countries that have offset the negative impact of the Russian-Ukrainian conflict. European Commission experts caution, however, that there is a risk that the situation could deteriorate if the crisis in Ukraine deepens. Another risk factor, according to EU experts, is some uncertainty about the economic plans of the new government.

On the basis of currently available data, the European Commission predicts that this year only Ireland, Malta and the Czech Republic will muster faster economic growth than Poland. Next year Ireland is expected to maintain its lead, ahead of Romania in second place and Malta in third place. According to the European Commission’s forecast, the EU economy as a whole will grow 1.9 percent and the eurozone economy will expand by 1.6 percent this year.

Experts from the Organization for Economic Cooperation and development (OECD) also predict relatively rapid growth for the Polish economy. In their November report, they put Polish GDP growth this year at 3.5 percent, followed by 3.4 percent next year. This marks a change from June when the OECD predicted that Poland’s economic growth would accelerate from 3.5 percent this year to 3.7 percent next year. In 2017, the OECD expects Poland’s economy to grow 3.7 percent.

According to the OECD report, Poland’s economic growth will be supported by robust growth in investment and consumption.

“Considerable infrastructure investment supported by EU funds will continue to underpin productivity and GDP growth, despite a temporary slowdown in 2016 at the switchover of budget periods for EU funds,” the OECD report says.

OECD experts suggest that inflation will be driven by an ongoing improvement on the labor market and rising wages. Risks to this outlook include possible problems in the euro area and a sharp slowdown on emerging markets, particularly Russia and China, the OECD says. “A stronger-than-expected effect of the automobile emissions scandal could impact on exports of Polish suppliers and car plants. By contrast, private consumption and investment could respond more strongly to confidence improvements and income gains,” the report says.

Projections from Polish institutions are also optimistic. The Gdańsk Institute for Market Economics (IBnGR) predicts that Polish GDP growth will reach 3.4 percent this year, followed by 3.6 percent next year. In April, the institute predicted 3.5 percent for 2015 and 3.8 percent for 2016. The institute says in a report that in the first half of 2016, the economic situation is likely to stabilize, with GDP growth at 3.4 percent, the same figure as in the last quarter of 2015. Poland’s economic growth is expected to accelerate slightly in the second half of next year; in the third quarter GDP is expected to grow 3.6 percent, followed by 3.8 percent in the fourth quarter.

According to the IBnGR, domestic demand will increase by 3.1 percent this year, significantly less than in 2014. Private consumption is also expected to rise by 3.1 percent. The IBnGR predicts that in industry and the service sector next year will be similar to this year; value added in these sectors is expected to increase by 5.0 and 3.5 percent respectively. Meanwhile, a significant improvement is likely to occur in construction, the IBnGR says, where value added is expected to increase by 6.7 percent, twice as much as this year.

Growing investment will mainly be driven by increased expenditure on fixed capital formation in the corporate sector. Another factor supporting investment will be an inflow of European funds to finance infrastructure projects. In 2016, domestic demand will increase by 3.5 percent, thanks to both growing private consumption (3.4 percent) and increased capital expenditure (8.0 percent). In 2015-2016, domestic demand will remain the main driver of economic growth in Poland, the IBnGR report says. According to the institute’s experts, the labor market will continue to improve on the back of continued stable economic growth. The IBnGR forecast suggests that unemployment in the country will stand at 10.1 percent at the end of 2015 and then fall to 9.2 percent a year later.

According to the IBnGR, Poland’s exports will grow 6.7 percent this year, while imports will increase by 6.0 percent. This means that foreign trade will contribute positively to GDP growth. In 2016, export growth is expected to pick up to 7.5 percent, and imports are expected to grow 7.2 percent. The situation in foreign trade will primarily be shaped by economic trends throughout the European Union, so an acceleration in Polish exports in 2016 will largely depend on an improvement in the economies of countries that are Poland’s major trading partners.

Andrzej Ratajczyk
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