Polish central bank sees faster recovery in 2021

Credit: REUTERS/BARTOSZ BANKA

The Polish economy is now expected to grow faster in 2021 than previously forecast, the central bank's latest projections showed on Monday, but the bank nevertheless warned that uncertainty related to COVID-19 weighed on the economic outlook.

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WARSAW, March 8 (Reuters) - The Polish economy is now expected to grow faster in 2021 than previously forecast, the central bank's latest projections showed on Monday, but the bank nevertheless warned that uncertainty related to COVID-19 weighed on the economic outlook.

Daily COVID-19 case numbers have been increasing rapidly in Poland, although the central bank said that vaccinations, government aid and record-low interest rates should allow the economy to return to pre-pandemic levels by mid-2021.

"The GDP forecast in the current round was shifted upwards due to the faster recovery of domestic economic activity, and, to a lesser extent, abroad, than assumed in the previous projection," the bank said in its March inflation report.

The bank forecasts gross domestic product will grow 4.1% in 2021, above the 3.1% forecast in the last inflation report, in November. It forecasts growth of 9.6% in the second quarter, slowing to 3.3% and 5.4% in the third and fourth quarters respectively.

Despite raising its forecasts, the bank highlighted the uncertainties weighing on the economy as Poland enters the third wave of the COVID-19 pandemic.

"The projection scenario ... assumes relatively sluggish -considering the scale of the decline in economic activity in 2020 – GDP growth in 2021," the bank said.

"It will be dampened by the slow lifting of the epidemic restrictions and the persistently heightened uncertainty about the future course of the pandemic."

It forecast GDP growth of 5.4% in both 2022 and 2023.

The bank also raised its CPI projections for 2021 and 2022 to 3.1% and 2.8% respectively.

"The upward shift in the CPI inflation path in 2021 relative to the November projection was largely accounted for by the revision of the forecast energy prices, with a smaller-scale correction of the growth in the prices of food and core inflation," the bank said.

(Reporting by Pawel Florkiewicz and Agnieszka Barteczko, writing by Alan Charlish, editing by Larry King) ((agnieszka.barteczko@thomsonreuters.com; +48226539700; Reuters Messaging: agnieszka.barteczko.reuters.com@thomsonreuters.net)) Keywords: INFLATION POLAND/PROJECTION (UPDATE 1, TABLE)

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