Macroeconomic Forecast Poland

May 2007 | Macroeconomic Forecasts

BMI View: Poland's economy is going from strength to strength, and we have revised this year's real growth figure up to 5.9%. Q107 growth looks set to reach its highest rate since Q104, and is increasingly being driven by domestic demand, with very strong investment (particularly construction), and private consumption indicators. Leading indicators (the PMI Index, retail sales) look very healthy, despite the initiation of a monetary tightening cycle in April which could see a further 25bps of hikes later this year. The cyclical economic upturn in Poland is likely to be only minorly impacted by interest rate hikes in 2007. In 2004, when the bank raised the reference rate 125bps in two months, growth of domestic credit for example remained broadly level. In addition to strong growth expectations, FDI hit an all-time high of US$14.7bn last year, and further strong interest is expected in 2007. This year, Poland will also benefit from the overlap of two EU budgets, with continued access to funding from the 2004-2006 budget, and also from the new 2007-2013 agreement, from which the country stands to benefit more than any other member state.

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