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Saturday, March 1, 2008

Polish GDP Q4 2007

The Polish economy grew at a slower annual pace in the fourth quarter after domestic demand eased, giving policy makers room to hold off on raising interest rates.

Gross domestic product expanded 6.1 percent in the final three months of 2007, the Central Statistical Office in Warsaw said today. Fourth-quarter growth was the slowest last year and down from 6.4 percent in the third quarter.

Poland's economy is growing at a slower rate than the 6.9 percent expansion in the neighboring Czech Republic or the the 14.1 percent growth rate in Slovakia, but this may be rather reassuring than being perceived as a problem.

There seems to have been a significant slowdown in private consumption, but these consumption dynamics may well have been a one-off effect and in the first quarter we may well see private consumption return to its old higher level.

Deputy Finance Minister Katarzyna Zajdel-Kurowska recognised that the fourth-quarter data indicated that the pace of growth in consumption was slowing, attributing the phenomenon to the impact of accelerating inflation. She also suggested that the dynamics of gross fixed capital formation, which was up 18.5 percent year on year, "remained high".

Total domestic demand grew by 6.2 percent, while consumer demand increased 3.8 percent. Construction was up 8.8 percent and production by 7.9 percent.

Full-year GDP growth is estimated to have reached 6.5 percent in 2007, the fastest pace in a decade. The government predicts 5.5 percent growth for 2008.

The central bank's quarterly forecast which was also released today showed the inflation rate may rise to 4.7 percent after reaching a three- year high of 4.3 percent in January.

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