Poland’s economic growth is expected to accelerate to 3.3 percent in 2017, compared to 2.8 percent in 2016, supported by stronger investment and consumption, according to forecasts published by the World Bank on April 20. The Financial reports.
Growth is also expected to remain broadly stable at 3.2 percent in both 2018 and 2019.
These forecasts update earlier figures released by the World Bank in January, which called for growth of 3.1 percent in 2017, and 3.3 percent and 3.4 percent in 2018-2019, respectively.
“Following a slowdown in 2016, Poland’s economy is picking up again because of new investments funded by the European Union (EU), while private consumption is rising due to strong labor market performance and the expenditure effect of the Family 500+ benefit program,” says Carlos Piñerúa, World Bank Country Manager for Poland and the Baltic States. “However, the future of the global economy is still very much uncertain, which will have an impact on Poland’s growth and its fiscal situation. Therefore, Poland needs to effectively implement the reforms laid out in the government’s Strategy for Responsible Development, placing particular emphasis on reforms to improve the business environment and promote innovation.”
The World Bank projects that Poland’s deficit will widen slightly to 2.6 percent of GDP in 2017, from an estimated 2.5 percent in 2016. In 2017, budgetary spending is projected to increase as the Family 500+ program will be in effect for the whole year for the first time and the roll-back in the retirement age will impact budgetary spending from October 2017. According to the forecast, the deficit may reach the EU threshold of 3.0 percent of GDP in 2018, if not further policy actions are taken.
Budget revenues are nevertheless expected to grow as a result of the country’s improving economic performance, the introduction of different measures by the Ministry of Finance, and the establishment of the National Fiscal Administration (KAS), which is expected to improve tax compliance and bridge the existing large gap in the VAT system.