Polish Economy to Grow at Slowest Pace in 12 Years, EU Says

Poland’s economy will grow in 2013 at the slowest pace in 12 years as domestic demand falters and exports are hampered by the weakness of its main trading partners, the European Commission said.

Gross domestic product will grow 1.2 percent this year, slowing from an estimated 2 percent last year to match the rate in 2001 before accelerating to 2.2 percent next year, the commission, the EU’s Brussels-based executive, said in a report today. This year’s GDP forecast was cut from 1.8 percent in the commission’s autumn report.

Polish companies cut output on lower orders from the euro region, which buys more than half of their exports, while the unemployment rate last month probably rose to a six-year high of 14.2 percent, according to the Labor Ministry, limiting demand for goods among Polish consumers. The government is trimming spending to reduce its deficit to the EU’s 3 percent of GDP limit.

The budget deficit will keep falling, “albeit at a slow pace due to the deteriorating macroeconomic outlook,” the commission said in its report. It estimated last year’s shortfall at “slightly below” 3.5 percent of GDP and forecast its level at 3.4 percent in 2013 and 3.3 percent in 2014.

As Poland is among countries that are forecast to present a deficit “above but still close” to EU ceiling, it may be eligible for a special rule that takes into account the cost of a pension overhaul, European Union Economic and Monetary Affairs Commissioner Olli Rehn said in Brussels today,

The zloty traded at 4.1545 per euro at 2 p.m. in Warsaw, rising 0.2 percent from yesterday and extending this week’s gains to 1.7 percent. The yield on the government’s 10-year zloty bond was unchanged at 3.99 percent.

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