Faulty forecast?

The current GDP forecast is for 4.8 percent economic growth, a number many analysts regard as excessively optimistic.

But government officials have said that though the forecast will be lower, it will not be changed drastically, and suggested that it will be revised downward by no more than one percent.

Last Friday, Citi Handlowy revised its GDP growth forecast down to 2.6 percent, from 3.6 percent earlier.

"The decision of several large firms (including steel mills, car factories and chemical companies) to cut production in the coming months strengthens our view that Poland is likely to face a substantial economic slowdown in 2009," Citi Handlowy's chief economist, Piotr Kalisz, said in a statement.

If economic growth slows far below the government's forecast, it will have difficulty meeting its target budget deficit for next year, which currently stands at zł.18.2 billion. But Deputy Finance Minister Katarzyna Zajdel-Kurowska told reporters last week that the changes would have no impact on budget deficit estimates.

Yet some analysts have said that budget revenue forecasts would have to be cut by as much as zł.7 billion if GDP growth is one percent lower.

Tomasz Bardziłowski, vice president of UniCredit CAIB Poland, took a different view, saying that meeting the budget deficit was less important than getting Poland through the current economic turbulence.

"I would welcome more spending by the government, especially investment in things like infrastructure," he told WBJ, adding that more spending by the government could help make up for the loss of investment in the private sector.