Polish Economy Developing Faster

Important Reform

Reform Helps Polish GDP

The European Commission has issued extremely favourable forecasts for the Polish economy. According to a recent EC report, Polish GDP will grow 3.2% in 2014 and 3.4% in 2015, although, back in February, the Commission predicted that the Polish economy would grow by 2.9% and 3.1% in 2015. However, thanks to growing domestic demand, growth is faster than expected. As a result, Poland will rank third in the EU, behind Latvia and Lithuania, with regards to growth. Several factors have contributed to the current state of the Polish economy. Undertakings such as changes in VAT and excise duty, the partial freezing of salaries in the public sector, and the gradual raising of the retirement age, have also resulted in greater stabilisation of the budget in 2014. Another vital step was the reform of the open pension funds (OFE) which underpinned a surplus of 5.7% of GDP in the public finance sector this year. Otherwise the Polish public finance sector would have experienced a 3.6% deficit. When it comes to public debt, its ratio to GDP is expected to fall from 57% in 2013 to 49.2% this year, and to rise to 50% in 2015. The EC report also shows that there will be an improvement on the Polish job market, as the unemployment rate (according to the EU methodology, which is different from that used by Poland’s Central Statistical Office (GUS)) is expected to fall this year to 9.9% and to 9.5% in 2015. Regarding the EU itself, the EC forecasts EU economic growth at a rate of 1.6% this year, with GDP growth at 2% in 2015.
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