Poland’s economy may grow 2 percent next year, half the government’s forecast, as western European banks hurt by the euro crisis curb lending and slower global growth damps demand for exports, Renaissance Capital said.
The government will probably prefer a tighter fiscal policy as public debt, at 53 percent of gross domestic product last year, threatens to breach a legal ceiling of 55 percent, Charles Robertson, the bank’s global chief economist in London, wrote today in an e-mailed note after meeting Polish officials. Exceeding that level would trigger mandatory measures such as a value-added tax increase and limits on pensions, he wrote.
While the central bank will probably leave borrowing costs unchanged for some time because of a weaker zloty, slowing growth will eventually prompt it to cut rates, Robertson wrote. The bank will lower its key rate to 4 percent by next March from 4.5 percent at present, he predicted.
Should the euro region’s debt crisis escalate, the zloty may fall to 4.90 against the euro as investors sell eastern European assets more than those of other emerging markets, according to Robertson. The zloty was at 4:42 per euro at 1:47 p.m. in Warsaw today.
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