Inflation rate drops as GDP growth crawls; low revenues widen budget deficit

Poland's Gross Domestic Product (GDP) grew by 0.8% year-on-year in the third quarter of 2001, the Central Statistical Office (GUS) reported yesterday. Economists expect GDP growth over the whole year to reach 1.2%, while an economic rebound could take place in the second half of 2002. Simultaneously, the inflation rate dropped to a post-communist record low of 3.6% in November. As a result of the economic slowdown, 95% of the government's projected budget deficit was used up by November. Economic progress, though weak, has been sustained by exports which continue to grow despite a strong zloty. All this, however, is unlikely to make the hawkish Monetary Policy Council (RPP) lower interest rates during its meeting which begins today. As analysts underlined, the council had already taken lower inflation rates into consideration when cutting rates a month ago. The RPP's Dariusz Rosati indicated that he sees inflation rising in December and again in the first half of next year. (Rzeczpospolita, p. B1, p. 1, Prawo i Gospodarka, p. 1, Reuters) M.K.