EBRD raises Poland's GDP growth forecast to 4 pct in 2018

Leszek Szymański

The European Bank for Reconstruction and Development (EBRD) has raised Poland's GDP growth forecast to 4.0 percent in 2018 from 3.4 percent, the bank's May report shows. In 2019, Poland's economy is to expand at a 3.3 percent rate.

"GDP growth in 2018 is expected to remain strong, at 4.0 per cent, before it slows down to 3.3 in 2019, as the supply problems and rapidly appreciating real exchange rate start to weigh on Poland’s competitiveness," the EBRD wrote in the report titled Regional Economic Prospects in the EBRD Regions.

The bank's economists stressed the weakness of private investment in Poland.

"Following a slowdown in 2016 and the first half of 2017, EU funds absorption and public investment have finally accelerated since the second half of 2017. Private outlays, however, remain slow due to policy uncertainty and the tight labour market," they wrote.

In their view, Poland should focus on its labour market problems.

"Unemployment fell to a new record low of 4.4 per cent in February 2018 but the growth of the employment share in total population has ground to a halt. While female employment rates in Poland are among the lowest in the EU, recently-introduced policies (such as a decrease of the retirement age or generous social transfers) have reduced female employment since the second half of 2017," EBRD wrote.

"Unless addressed by policy-makers, labour shortages, which are exacerbated by low participation rates of the disabled and the elderly, will likely weigh on future growth potential," they concluded.