Poland's economic growth will probably slow down to 1.5% y/y in 2013 from 1.9% reported in 2012, but will rebound to 2.8% in 2014, the World Bank said in the latest issue of its EU11 Regular Economic Report. In June, it projected Poland's 2013 GDP growth at 1.0% and the 2014 growth - at 2.0%.
The institution also said it expects the fiscal deficit in Poland to widen to around 4.6% of GDP in 2013, from 3.9% of GDP in 2012, due to revenue shortfalls mainly from VAT, excise duties and CIT, and despite expenditure cuts embedded in a budget amendment from September.
Poland's fiscal deficit in 2014 is expected to shrink by around 1pps of GDP, also reflecting large savings from changes in the pension system and the continuation of spending controls introduced in 2011- including a freeze in public sector wages and personal income tax thresholds as well as maintaining a higher VAT rate, the World Bank's report also reads.
It also expects the debt to GDP ratio to decrease on the back of sizable transfer of sovereign debt (8.5% of GDP) from the open pension funds to the state pension pillar.