The World Bank raised its forecast for Poland’s GDP growth in 2019 on Wednesday to 4.3 percent from the 4.0 percent expected in the spring, on the back of likely boosts to domestic consumption and a rebound in investment.
The bank has not changed its growth forecasts for Poland’s economy in 2020 and 2021, at 3.6 percent and 3.3 percent respectively.
“Household consumption, fueled by expected increases in budgetary expenditures and a tight labour market and rising wages, will continue to grow in Poland,” Carlos Piñerúa, World Bank country manager for Poland and the Baltic States said. Social spending would lead to further drops in the country’s abject poverty rate, measured the proportion of the population with an income of USD 5.50 per day or less to 1.9 percent in 2019 and 1.6 percent in 2021, the economist said.
Additionally, Low interest rates and absorption of EU investment funding “will help sustain Poland’s economic growth prospects in the near term,” according to the bank.
Labour market boosts
Poland, which was in first place in Europe in terms of acceptance of migrants in 2017 - in its case mostly from Ukraine and other former Soviet satellites- was an excellent example of how immigration can boost growth, Asli Demirgüç-Kunt, chief economist for the CEE and Central Asia region, said. “Migrants disproportionately tend to be of working age and can therefore ease demographic pressures by increasing the size of the labour force, raising productivity, and boosting growth.”
Poland’s unemployment rate has fallen to 5.1 percent in September according to data released on Tuesday be the Family, Labour and Social Policy Ministry, which economists say is close to its natural rate.
While the bank did not alter its forecast for the next two years, the economists noted that, in the medium term, the country’s budget deficit may be stretched to EU limits of three percent per annum to cover social spending.