World Bank expects growth in Poland in 2009

(WARSAW) - Poland is likely to be the only ex-communist country in the European Union to see its economy grow this year despite the global economic crisis, a World Bank economist said Thursday in Warsaw.

"Given the signs that we've seen, we are still very hopeful for Poland in fact to manage for 2009 a positive GDP growth, which would probably make it the only country in the EU10 to achieve that," Kaspar Richter, a senior economist for the World Bank's Europe and Central Asia Region told journalists.

His forecast is in line with those of the Polish government but contradicts the pessimistic estimate of the European Commission, which has predicted a decline in Poland's gross domestic product this year.

"And for 2010 we would probably see a number that may not be very different than the number in 2009, that is up to 1.0 percent or so of GDP growth in 2010," Richter said.

Poland's finance ministry has forecast growth of between 0.3 to 2.0 percent this year, while the European Commission believes growth in Poland will shrink by 1.4 percent.

The World Bank foresees a 3.0 percent contraction in GDP for the entire EU10 in 2009 and stagnation next year.

The EU10 comprises the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, which joined in 2004 and Bulgaria and Romania, members since 2007.

The situation is very different from one country to another, said Thomas Laursen, a World Bank official responsible for Poland and the Baltic states.

"Nowhere is the difference between countries in the region as stark as between the Baltic countries and Poland," he said.

"Reflecting their very large initial macroeconomic imbalances and reliance on foreign credit, the Baltic countries are suffering a severe downturn with output expected to contract by around 15 percent this year."

"Meanwhile, Poland, where macroeconomic fundamentals are much stronger, may still see positive growth this year," Laursen said in a statement.

Richter explained Poland's relatively good outlook by the fact that its economy is less open and therefore less affected by the decline on its export markets and by the government's "very timely policy response" to the crisis.

"The fact that the exchange rate has adjusted by about 35 percent since September has helped to support exports and at the same time consumption is still holding up quite well," Richter noted referring to the slump in the value of the Polish currency, the zloty, against major currencies.

"Poland has managed to limit better some of the phenomena of overheating that we've seen in the other economies," he said.