EC cuts Poland's growth forecasts for 2019, 2020

2019-11-07 18:15 update: 2019-11-11, 13:37
Photo: PAP/Andrzej Grygiel
Photo: PAP/Andrzej Grygiel
The European Commission (EC), the EU's executive arm, on Thursday downgraded Poland's GDP growth forecasts to 4.1 pct from 4.4 pct in 2019 and to 3.3 pct from 3.6 pct in 2020. The balance of risks for the forecasts is slightly negative, the EC said.

In 2021, the Polish economy is expected to grow by another 3.3 percent, according to the EC.

Private consumption will remain the main growth motor in Poland but it will slow down from the record high reached in 2018, the EC said, adding that recent changes to social transfers and taxes will boost disposable incomes of households in late 2019 and early 2020.

Public investments will decelerate in 2019 and will continue to grow throughout 2020 and 2021, albeit at a moderate pace, according to the EC.

External environment is the main source of uncertainty for Poland's economic prospects, and especially possible disturbances in the global supply chains, therefore the balance of risks for the GDP forecasts is slightly negative, the EC went on to say.

The growth of Polish exports will slow down compared to last years' levels on the back of a weaker global trade.

Demand for labour will remain solid, but lower than today, which will keep wages growth close to 8 percent until 2021, also due to planned raises of the minimum wage as well as public sector wages.

Consumer prices growth will reach a peak at about 3 percent in the first quarter of 2020 to later decrease to 2.5 percent, and will remain in this area until 2021.

The EC also downgraded its GDP growth forecasts for the whole EU to 1.4 pct from 1.6 pct in 2020, and kept the 2019 forecast at 1.4 pct. In 2021, the European economy is also expected to grow by 1.4 percent.

The euro zone's economy is to grow by 1.1 pct in 2019 (a 0.1 percentage point downgrade) and by 1.2 pct in 2020 (down by 0.2 pp). In 2021, it is going to expand by 1.2 pct. (PAP)