EBRD sees growth moderating in Poland in 2020

By Axel  Reiserer

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The EBRD expects the pace of growth in Poland to slightly slow in 2020 on the back of a weaker global economic outlook, pressure from slower growth in the eurozone and a contraction in worldwide automobile production.

After growing by 4.4 per cent in the first half of 2019, the Polish economy is expected to grow by 3.9 per cent in 2019 and 3.5 per cent in 2020, according to the EBRD’s latest Regional Economic Prospects report.

Average growth of 2.4 per cent is seen in 2019 across all EBRD regions, compared with 3.4 per cent in 2018.  The report sees a recovery to 2.9 per cent in 2020, which is a small downward revision from the forecast of 3.0 per cent in May and still clearly below 2017’s growth rate of 3.8 per cent.

The report sees economic growth moderating in most of central Europe, the Baltic states and south-eastern Europe, in line with weakening euro-area growth and headwinds to global trade.

It sees a strong correlation between growth in emerging Europe and trends observed globally and in advanced European economies. It notes that global growth forecasts are currently at their lowest level since the start of the global financial crisis.

The EBRD report also claims that rising household disposable incomes are driving further strong consumption in Poland, although the expected generous hikes in minimum wages are likely to induce higher inflation, and will also be boosted by the anticipated rise in energy prices from next year.

Investment will remain supported by substantial inflows of funds from the EU and government-led investments, including those financed by savings in the Occupational Pension Scheme. Nevertheless, the approaching slowdown in Poland’s key trading partners in the EU represents an important risk to that scenario.

“Given its deep integration in ‘factory Europe’ and the importance of the automotive industry for the regions’ economies, emerging Europe is highly vulnerable to weakness in the automotive sector and a further slowdown in Germany,” the report states, pointing out that Poland is one of the countries that is highly dependent on the automotive industry.

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