Bank PKO BP experts upgrade Poland's GDP growth forecast

According to the PKO BP experts, the growth will be based on domestic demand: both investment and private consumption. Kalbar/TFN

Poland's economy could expand by as much 4.6 percent in 2019, rather than the 4.2 percent forecast before, analysts of Poland's largest lender by assets PKO BP wrote in their latest quarterly report.

"We are hiking the 2019 GDP growth forecast to 4.6 percent," PKO BP Chief Economist Piotr Bujak also said on Tuesday, explaining that the upgrade is due to better-than-expected economic growth in Q1, along with strong resilience to deterioration of global economic conditions.

According to the PKO BP experts, the growth will be based on domestic demand: both investment and private consumption, in recognition of the expected positive impact from the coming peak of EU fund absorption and a government fiscal stimulus.

Among persisting external threats, PKO BP analysts pointed to continued escalation of trade tensions, particularly on the US-China axis, as well as Brexit-related uncertainty. Internal risks to the 4.6-pct forecast come from parliamentary election results and their impact on public spending, the economists said. The labour supply deficit and the effect it might have on investment activity might also pose a challenge.

On the other hand, the external balance will be supported by relatively strong exports: the effect of not only the expansion of Polish producers on foreign markets, but also at least temporary stabilisation of the economic situation in China and Western Europe. With continued inflows of long-term capital to Poland and a moderately growing surplus in services, PKO BP experts predict a further decline in foreign debt. In mid-2019 it may, for the first time since 2009, fall below 60 pct of GDP, they wrote.