While Poland faces “no risk of recession,” the government may need to “adjust” its forecast for growth next year to 1.5 percent to 2 percent, down from a preliminary estimate of 2.9 percent, as the currency bloc’s debt crisis intensifies and “recession spreads across the euro countries,” Filar said in an interview in Warsaw yesterday.
Ludwik Kotecki, the Finance Ministry’s chief economist, said last week the government may lower its 2012 growth forecast at the end of this month. The government approved a draft 2013 budget in June that assumed growth will accelerate to 2.9 percent from 2.5 percent this year. Eight of the 17 euro nations are in recession, while the euro-area manufacturing gauge fell to a 37-month low of 44 last month from 45.1 in June, an Aug. 1 report by London-based Markit Economics showed.
“Continuous hints from the government about a significant slowdown may eventually convince the central bank to cut rates,” Ernest Pytlarczyk, head of financial markets research at BRE Bank SA in Warsaw, said by phone today. “Slower growth makes fiscal policy more difficult and could change investors’ positive attitude toward Poland, although I don’t see this happening before the final months of this year.”
In May, Poland’s central bank raised its main rate by a quarter-point to 4.75 percent in the face of inflation that has exceeded its 2.5 percent ceiling since October 2010. It will return near the target only next year, the bank said in its Inflation and GDP outlook on July 9.
The bank has kept its rate unchanged since the May increase. Two of 10 members of the rate-setting council, Elzbieta Chojna-Duch and Andrzej Bratkowski, said last month that policy makers should consider cutting borrowing costs as early as September since growth may be weaker than expected.
An expansion of 1.5 percent next year would be Poland’s slowest since 2001. The economy grew 4.3 percent in 2011, the most in the 27-nation European Union except for the three Baltic states, and 3.5 percent in the first quarter of 2012 from a year earlier. It will be the fastest-growing EU economy this year, the European Commission forecast on May 11.
The zloty declined 0.5 percent to 4.0637 per euro at 3:30 p.m. in Warsaw, the biggest daily decline in 10 days. The zloty reached the highest since August 2011 yesterday. The average yield on the 10-year government bond rose 11 basis points to 4.83 percent.
The government should revise next year’s growth forecast to “about 2 percent,” Boguslaw Grabowski, another member of Prime Minister Tusk’s economic council, told TVN CNBC today.
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