Poland’s economic growth will probably slow “noticeably” in the next two years on austerity measures and the euro area’s debt crisis, the Organization for Economic Cooperation and Development said.
Gross domestic product will grow 2.5 percent in 2012 and 2013, compared with 4.2 percent this year, according to the Paris-based OECD’s economic outlook, published today. The 2011 estimate is up from a previous forecast in May of 3.9 percent, while the projection for the following two years was cut from 3.8 percent.
“GDP growth is projected to slow noticeably in 2012 and 2013” due to “fiscal consolidation and sluggish external demand, which will in turn weaken private consumption and public and private investment,” the OECD said in the report, adding that “weakness in domestic demand is projected to be partly offset by stronger net exports triggered by significant zloty depreciation in 2011 and the 2012 football championships.”
Poland’s economy is slowing as demand from neighboring Germany, the country’s biggest trading partner, wanes amid the euro area’s sovereign-debt crisis. Slower growth may derail government’s plans to shape up public finances.
Prime Minister Donald Tusk vowed to trim public debt to 52 percent of GDP next year and to 47 percent in 2015 from this year’s estimated 52.8 percent, as the budget gap narrows to at least 3 percent of GDP in 2012 and 1 percent in 2015, from an expected 5.8 percent this year.
“The consolidation measures announced thus far are not sufficient to achieve these targets, especially given the government’s optimistic underlying growth projections,” said OECD. “Additional measures must be announced quickly and clearly communicated to strengthen credibility.”
The OECD said the inflation rate will fall to 2.3 percent next year, below the central bank’s 2.5 percent target.
“A significant deterioration in economic conditions could be met by interest-rate cuts, provided that the zloty does not deteriorate substantially,” it added.