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World Bank warns of possible growth slippage in 2012

PR dla Zagranicy
Peter Gentle 19.01.2012 15:15
The World Bank said it expects the Polish economy to grow 2.9 percent in 2012, although warned that this could be trimmed to 2.5 percent if growth in some of Poland’s richer neighbours also falls.

The report's author Andrew Burns (left) and head of the Polish and Baltics states' office of the World Bank, Xavier Devictor. PAP/Andrzej Hrechorowicz

Andrew Burns, author of the World Bank's most recent global outlook report, told reporters that: "Poland's numbers could be somewhere between 2.5 percent and 2.9 percent…Now we are leaning towards 2.5 percent due to lower forecasts for developed countries."

The report notes that the global environment has become much more precarious.

“Turmoil since August has affected financial conditions in developing countries and economic activity worldwide,” the report notes, adding that “Europe is making a fragile recovery.”

The WB report notes that developing countries are vulnerable because of reduced fiscal space, maturing short‐term and long‐term debt, potential deleveraging by banks in the high‐income world, weaker export demand and remittances flows and commodity prices.

Finance Minister Jacek Rostowski said earlier this week that the government was on course to meet its budget targets for this year.

Fitch said recently that a central budget deficit of 35 billion zlotys was possible, although was more circumspect about achieving the government's target of a 3 percent of public sector deficit to GDP given the need to rein in spending and the likely impact this could have on growth.

In December the government said its net borrowing needs in 2012 would be 46.2 billion zlotys, up from 32.6 billion in 2011.

A 4.77 percent yield on two-year papers issued today appears to indicate that the markets have either priced in a possible downward correction in GDP numbers or are waiting for events elswehere - mainly in Athens - to unfold. Or both.

Meanwhile, headline inflation came in at 4.6 percent in December, down from 4.8 percent in November and in line with expectations, although above target of 2.5 percent.

The central bank (NBP) left rates unchanged for the seventh straight month this week and is expected to maintain that course for a while, despite the slowing economy.(jh)

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