Country Risk Service Poland Updater
The Economist Intelligence Unit, April 2013, Pages: 22
The Economist Intelligence Unit expects the government, led by the centre-right Civic Platform (PO) with the agrarian Polish Peasants' Party (PSL), to remain in power until the next scheduled general election, in 2015. We forecast a further deceleration of real GDP growth in 2013, to 1.4%, because of the recession in the euro zone, weak domestic demand and sluggish investment expenditure. Owing to a combination of a weaker zloty and upward pressure on commodity prices arising from a bad harvest, average inflation reached 3.7% in 2012. Lower commodity prices, the absence of demand-pull inflation, and sluggish wage growth will contribute to the deceleration of inflation in 2013. The current-account deficit is expected to narrow in 2013 as a proportion of GDP as weak domestic demand squeezes import growth.
The government has a small but workable majority in parliament. However, the slowing economy is making the government deeply unpopular. This is likely to underpin the rising popularity of the main right-wing opposition party, Law and Justice (PiS), which will intensify its criticism of the government. The impact on political stability is however negligible as the government remains stable and strong.
The risk of fiscal slippage in 2013 remains high as economic growth continues to falter. Further rate cuts by the monetary policy council (MPC) of the central bank also remain a possibility, as inflation continues to fall faster than expected, helping to prop up domestic demand.
Country Risk Service Poland Updater
Poland at a glance: 2013-17
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Rating definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Central scenario for 2013-17: Political stability
Central scenario for 2013-17: Election watch
Central scenario for 2013-17: International relations
Central scenario for 2013-17: Policy trends
Central scenario for 2013-17: Fiscal policy
Central scenario for 2013-17: Monetary policy
Central scenario for 2013-17: Economic growth
Central scenario for 2013-17: Inflation
Central scenario for 2013-17: Exchange rates
Central scenario for 2013-17: External sector
Key risk indicators
Ratings summary
Quarterly indicators
International assumptions summary
Economic structure
Public finances
Exchange rates, interest rates and prices
Financial sector
Current account
International liquidity
Foreign payment and liquidity indicators
External trade
External financing requirement
External debt stock
External debt service
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