Steady as she goes

According to the Center for Social and Economic Research (CASE), Poland recorded a small slowdown in economic growth for the third quarter of the year, reaching 5.1 percent. The report predicts that economic growth will reach 5.3 percent for the whole of this year, slipping to 4.9 percent next year, and 4.5 percent in 2008.

"Growth is still shaped by market demand, as the value of salaries continued to grow within all sectors," said Katarzyna Piętka of CASE. Piętka added that investments have also been an important factor for economic growth and besides investments made by companies, local-government investment increased by over 38 percent.

Przemysław Woźniak of CASE said that a significant indicator is that though Poland has maintained a low rate of inflation, it is no longer among the EU's best performers. Germany, Finland, Austria and Sweden all posted lower inflation rates. Poland's slight rise in inflation can mostly be put down to increasing prices of foodstuffs.

According to the report, the trend for rising prices should hold for the next two years, with inflation reaching 2.7 percent in 2007. Woźniak said that the import of low-cost goods from Asian markets, the strong złoty and the expansion of hypermarkets were the main factors influencing Poland's inflation rate.

In addition, CASE predicts an acceleration of EU investment projects, however absorption of EU funds is not expected to exceed 40 percent within the next two years.

An increase of employment and the emigration of workers will favor a further lowering of the unemployment rate, which the report says should drop to 11 percent by the end of 2008.