Poland’s economy is likely to expand 4.2% in 2017, according to the latest economic forecast published by the European Commission on November 9.
The “Autumn 2017 Economic Forecast: continued growth in a changing policy context” sees the commission raise its growth prediction by as much as 0.7pp compared with the previous forecast in May. The revised forecast reflects the economy’s good performance in 2017 so far.
“Faster wage growth, moderate employment gains and strong consumer confidence are set to sustain private consumption as the main growth driver," the EU executive predicts.
“Some slowing down of consumption towards the end of the forecast period is expected, as higher inflation reduces household real disposable income and employment gains slow,” the Commission cautioned, however.
Investment activity is expected to gradually recover, largely due to a higher utilisation of EU funds, it added.
The contribution of net exports to growth is set to stay negative in 2017 and 2018 – due to fast-growing imports as domestic demand increases and a slight appreciation of the zloty - before turning minimally positive in 2019, according to the forecast.
Inflation is expected at 1.6% in 2017, a reduction of 0.2pp on the previous outlook, and 2.1% in 2018. Polish unemployment is expected to continue to fall, dropping to 5% this year – compared to 5.2% expected in the May outlook - and 4.2% in 2018, as calculated in terms used by the EU.
With robust economic growth for the rest of this year looking likely, the EU executive also carried out a major revision of Polish fiscal indicators. According to the commission, the budget gap will come in at just 1.7% of GDP, a revision of 1.2pp against the previous forecast. The reduced gap is mainly due to higher tax revenues and social contributions originating from the strong labour market. The budget deficit will remain at 1.7% of GDP in 2018 as well.
State debt is predicted to fall slightly to 53.2% of GDP in 2017 from the previous year’s figure of 54.1%. In 2018, the burden should decrease further to 53% of GDP.