S&P upgrades Poland’s GDP forecasts. Warns of ‘overheating’

Ratings agency S&P raised its GDP forecast for Poland to over 4 percent for this year. “We expect that in 2018 real GDP growth in Poland will easily exceed 4 percent, as in our opinion the economy of the country is in an overheat mode,” the report said.

Back in October, the agency forecasted the 2018 GDP growth at 3.8 percent.

S&P analysts point out that the wage growth has reached a record high and stimulates consumption, while productivity is weakening.

“Due to the lack of reaction in the form of policy change, external and other weaknesses may gradually appear, although Poland has solid long-term foundations and various automatic stabilizers, in particular, floating exchange rate,” the report explained.

The aging population is a key limitation of growth for Poland. The solution may be increasing the labor supply, it was also indicated.

Analysts also point out that the changes in the legal environment, especially regarding the Constitutional Tribunal and public media, and the launch of Article 7 procedures by the European Commission can pose a risk. “The deteriorating institutional efficiency of Poland is an additional cause of concern, which partly explains the low value of private investment in the past year,” the report concluded.

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