EC upgrades Poland's 2010 GDP growth forecast to 2.7% from 2.6%.

By bne IntelliNews May 6, 2010
The European Commission expects Poland 's real GDP growth to reach 2.7% in 2010 and 3.3% in 2011, the EC has said in its spring forecasts. In its autumn forecasts, the EC it saw this year's growth at 2.6%. The main drivers of Poland 's continues recovery are the ongoing rebound in global trade and foreign capital inflows, the latter reflecting the lower risk aversion in international capital markets and the improved perception of the Polish economy among foreign investors, it said. According to the Commission, Poland 's GDP growth this year will be matched only by that of Slovakia and will be the highest in the European Union. In 2011, Estonia (3.8%), Slovakia (3.6%) and Romania (3.5%) are expected to grow faster than Poland . This year, the worst performers will likely be Lithuania (-3.5%) and Greece (-3.0%), the latter being also the sole country to see recession in 2011 (-0.5%). The EC also forecasts Poland 's harmonized unemployment rate at 9.2% in 2010 and at 9.4% in 2011 vs. 8.2% last year. According to the Commission, labour supply will benefit in coming years from recent structural reforms (reduction of the tax wedge, abolition of special early pensions for a majority of beneficiaries, and effects of the pension reform). Finally, the pronounced increase of public investment is also expected to boost potential output. As for inflation, the EC deems that HICP measure reached its peak last year (at 4.0%) - it is expected to ease to 2.4% in 2010 and to amount to 2.6% in 2011 . Inflation is expected to fall in 2010, reflecting the large negative output gap following the crisis, contained wage pressure, a limited rise in administered prices and the appreciating currency, the report said. ISB, tom

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