IMF Projects Higher Growth For Poland

The International Monetary Fund revised upward on May 22 its projections for growth in Poland this year and in 2007, but urged the EU newcomer to reduce its budget deficit to secure strong medium-term growth.

"We have raised our projections for GDP growth in Poland in 2006 and 2007 to 4.8% and 4.5%," from earlier projections of 4.2% and 3.8%," IMF mission chief in Poland, Susan Schadler said.

"The recovery so far is well balanced between consumption, investment and exports. Inflation and the current account deficit are low and the unemployment rate is falling. The fiscal accounts for 2006 are on track," Shadler said.

Poland is faced with "major opportunities" to ensure strong growth in the medium-term, including grants from the EU, which Poland joined in 2004, and "closer integration with other European countries. But to turn these into higher growth, it will be necessary to raise private investment, increase employment and keep the growth of productivity high," Schadler urged.

Poland has the highest unemployment rate in the EU, running at around 18% of the workforce, but its inflation rate of 2.1% in 2005 was one of the lowest in the 25-member bloc.

Growth in Poland has averaged about 3.25% since 2000, according to a report by the IMF, which judged the growth rate "weak by emerging market standards."

Poland is the only EU newcomer not to have set a date for joining the eurozone. For now, Poland does not meet preliminary conditions to join the eurozone because of the size of its public deficit, which was 4.4% of GDP in 2005 -- above the EU-set 3% limit.

Copyright Agence France-Presse, 2006

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