No budget blues
Weak GDP growth in Q1 is a temporary phenomenon, and does not put this year's budget in jeopardy, according to Finance Minister Mirosław Gronicki.
"Four percent growth remains our forecast for growth this year. Budget revenues look better and better and there is no danger for the execution of this year's budget," Gronicki said.
In fact, Gronicki maintains the budget deficit is likely to come in lower than previously expected. "The 2005 budget deficit will be smaller than the earlier planned zł.35 billion. There is a high chance that it will reach around zł.33 billion."
Analysts said first-quarter GDP growth of just 2.1 percent - significantly lower than the expected three percent - made the government's growth forecast and budget targets for the year doubtful, but Gronicki remained optimistic, saying he expects the situation to improve.
"We had counted on this being the worst quarter [but] the quarter-on-quarter figure [of a seasonally adjusted rise of 1.2 percent] shows that it may improve. The question is how fast the pick-up will be," he said, adding that the economy could "grow as fast as it previously slowed down."
Gronicki was also upbeat about the much lower than expected investment growth figures reported for Q1 last week, which came in at one percent, while the market had been expecting something like 10 percent.
"The poor growth in investment is the important thing," Gronicki said. "It is the worst element of this data, but investments do have a seasonal quality so I hope this low growth is only temporary." (Reuters)
"Four percent growth remains our forecast for growth this year. Budget revenues look better and better and there is no danger for the execution of this year's budget," Gronicki said.
In fact, Gronicki maintains the budget deficit is likely to come in lower than previously expected. "The 2005 budget deficit will be smaller than the earlier planned zł.35 billion. There is a high chance that it will reach around zł.33 billion."
Analysts said first-quarter GDP growth of just 2.1 percent - significantly lower than the expected three percent - made the government's growth forecast and budget targets for the year doubtful, but Gronicki remained optimistic, saying he expects the situation to improve.
"We had counted on this being the worst quarter [but] the quarter-on-quarter figure [of a seasonally adjusted rise of 1.2 percent] shows that it may improve. The question is how fast the pick-up will be," he said, adding that the economy could "grow as fast as it previously slowed down."
Gronicki was also upbeat about the much lower than expected investment growth figures reported for Q1 last week, which came in at one percent, while the market had been expecting something like 10 percent.
"The poor growth in investment is the important thing," Gronicki said. "It is the worst element of this data, but investments do have a seasonal quality so I hope this low growth is only temporary." (Reuters)
