EC raises Poland's 2010 GDP growth forecast to 2.6% from 1.8%.

By bne IntelliNews February 26, 2010
The European Commission expects Poland's real GDP growth to reach 2.6% in 2010 vs. 1.8% assumed in its autumn forecasts, the EC said in its Interim Forecast. February 2010 . The Commission also estimates Poland's 2009 GDP rise at 1.2%, i.e. by 0.5pps more than it expected in the autumn forecast. The EC forecasts GDP rise, in quarterly terms, at 0.1%, 0.5%, 0.8% and 0.9% in subsequent quarters of 2010, while it estimates the Q4/2009 growth at 1.7% q/q (vs. 0.1%, 0.5% and 0.5% in Q1-3/2009, respectively). The Commission stresses that in 2009, the upswing was driven by a sharp increase in public investment (partly co-financed by EU funds) and a rebound of exports. Private consumption continued to increase, supported by better-than-expected employment performance and cuts in the personal income tax rates. In 2010, the recovery would continue to be driven by exports , which will benefit from the rebound in external demand and the lagging positive effects of the past exchange rate depreciation. The latter effect will however gradually fade away and domestic demand will become the main driver of growth in 2010 , the Commission argued. It also expects investments to recover slowly after the drop recorded in 2009. This will reflect robust public spending in capital expenditure, firming-up production expectations and improved perception of the Polish economy among foreign investors, attracting FDI inflows, it added. The EC forecasts HICP inflation - which amounted to 4.0% y/y at end-2009 (slightly above the autumn forecast) - to remain close to the central bank's inflation target of 2.5% over the forecast horizon, reflecting the large negative output gap caused by the crisis. At end-2010, it should be 2.3% y/y (vs. 1.9% expected in the autumn), the Commission said.

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