Sluggish Europe main risk to Poland: IMF
Poland central bank cut its key interest rate by a quarter-point to a historic low of 3% last week.
WARSAW (AFP) - Hit by drag from the eurozone crisis, growth in Central European heavyweight Poland will slow to 1.2 percent this year before an uptick to 2.2 percent in 2014, the International Monetary Fund (IMF) said Thursday.
"We do expect the economy to recover in the second half of the year, as Europe itself begins to recover and as the effects of monetary policy begin to be felt," IMF official Julie Kozack said, urging "monetary easing without delay" as stimulus to growth.
Poland s central bank (NBP) cut its key interest rate by a quarter-point to a historic low of 3.0 percent last week, amid a slew of forecasts of slower than expected growth. Analysts are both advising and expecting further cuts in coming months.
Kozack lauded fiscal consolidation in recent years noting "a decline in the fiscal deficit from 7.9 percent of GDP in 2010 to 3.9 percent of GDP in 2012, and the first fall in the public debt ratio since 2007."
The IMF predicted Poland s general government deficit would "reach 4.0 percent of GDP in 2013, largely as a result of the impact of the growth slowdown on fiscal revenues."
Kozack advised Warsaw to "maintain the fiscal measures in the 2013 budget", but as the economy picks up "a consolidation of about 1.0 percent of GDP will be needed on the fiscal side on the 2014-16 horizon."
"We suggest avoiding further cuts in public investment as it is very important for boosting potential output going forward," Kozack said.
The only EU member to have grown each year over the last two decades, Poland mustered just 0.1 percent growth in the first quarter, initial official data showed, after zero growth in the last quarter of 2012.
Analysts pin the sharp slump quarterly slump which threatens stagnation largely on drag from the eurozone crisis which has hit Poland s main trade partners, namely Germany.
