We present an updated outlook on the Polish economy, taking into account the most recent economic data.
Compared with when we published our last edition the future is now looking even less bright, as the global environment continues to deteriorate. As the year comes to an end and with Q3 GDP data available, we revise our 2011 forecast marginally, to 3.9% y/y. For 2012E, we expect Polish growth of about 2.8% y/y, while we have cut our 2013E forecast to 2.2% y/y.
While private consumption growth, as well as investment expansion, looks set to lose steam, it is in domestic demand that we expect to see the largest slowdown next year – as austerity measures will inevitably take something off consumption activity. Furthermore, we expect external balances to deteriorate somewhat from the current year, with the current account deficit running at about 4.5% in 2012-13E and the trade balance remaining negative, with deficits running at about 2.5% by 2013E.
Inflation is still well above the central bank’s target of 2.5%, looking to average 4.1% in 2011, but given the current economic climate, we expect inflation growth to continue to moderate and to average just above 3% for the next two years. Finally, we expect unemployment to remain at elevated levels, on the plus side of 12%, with risk of increasing unemployment from mid-2012.
