European Commission upgrades GDP growth forecast for Poland

Posted November 10, 2017

It is gloomier about the outlook than the Bank of England, which expects growth of 1.7% in both years.

The commission has also raised its forecast for euro area growth over the next two years - to 2.1 per cent (up 0.3 percentage points ) in 2018 and 1.9 (up 0.2 percentage points) in 2019.

He pointed out that for the first time in a decade that all European Union countries will grow this year. Investment is also picking up amid favorable financing conditions and considerably brightened economic sentiment as uncertainty has faded, suggesting that the European citizens move forward, leaving the economic crisis in the past, as the economies of all EU-member states are expanding and their labour markets improving, but wages are rising only slowly. "It is without a doubt that we are entering a new phase in the European economic recovery".

For 2019, the commission projected 1.9 percent expansion.

Private consumption is expected to recover after a weak performance in the first half of 2017, mainly because more residents were in employment.

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However, Pierre Moscovici, the commissioner for economic and financial affairs, warned that while both the eurozone and the wider European Union are expected to grow in 2018 and 2019, "challenges remain in the form of high debt levels and subdued wage increases".

Other macroeconomic indicator trends forecast by the EC for the Bulgarian economy included a decline in its current account surplus, from 4.2 per cent of GDP last year to three per cent in 2017 and 2.4 per cent next year; inflation turning positive to reverse the deflationary trend in place since 2013; and a balanced Budget for a second consecutive year (compared to the spring estimate, which forecast a deficit of 0.4 per cent of GDP in 2017).

But the report was especially sour for non-euro Britain which saw its growth forecast for 2017 slashed to 1.5 percent.

Unlike the U.K., Spain is expected to avoid economic damages from the political upheaval triggered by an independence push in one of its most prosperous regions, Catalonia. Malta is the best performer, with growth of 5.6% in 2017, 4.9% in 2018 and 4.1% in 2019.

"We think, at this stage, that the macroeconomic impact is limited, nearly negligible", Mr. Moscovici said of the secessionist move that Madrid has moved to quash. The EC sees annual average inflation rising to 2.3% this year, 2.6% in 2018 and 3.0% in 2019, still within the 3% +/- 1pp target band of the National Bank of Hungary (MNB). The Commissioner added that the recovery in the eurozone is low by historical standards and was "atypical given its dependence on policy support, the continuing presence of fiscal and financial fragilities stemming from the crisis and the relatively subdued domestic demand compared to past recoveries". Unemployment in the euro area is expected to average 9.1% this year, its lowest level since 2009, as the total number of people employed climbs to a record high.