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Poland to have ‘very difficult’ first quarter

Growth in central Europe’s largest market slowed to 2.0% in 2012

Gulf News

Warsaw: The first quarter of 2013 will be one of the most difficult for the Polish economy as growth loses steam, but a pick-up is expected in the second half of the year, the prime minister said on Friday.

Growth in central Europe’s largest market slowed to 2.0 per cent in 2012, falling short of the government’s forecast of 2.5 per cent as the Eurozone crisis took its toll on exports, investment weakened and private consumption sank.

“The first quarter will be one of the most difficult in recent years,” Prime Minister Donald Tusk told reporters in Warsaw.

“The situation will improve in the second half of the year, with a better outlook in Europe and the world. For Poland, a lot depends on what happens in Germany,” its principal trade partner, he added.

While Tusk insisted the lower than projected growth last year was “nothing dramatic”, he admitted “the slowdown in the fourth quarter was very worrying.”

“Consumers concerned by the crisis are tightening their belts,” he added.

A recent report by Capital Economics analysts noted that private consumption in Poland, a market of 38.2 million, fell “in annual terms for the first time in over 15 years.”

“In the spring, the government will launch a debate on the euro,” Tusk also said on Friday.

Poland adopted a wait-and-see approach on joining the Eurozone as the 17-nation currency bloc grappled with a debt crisis.

But Warsaw is reopening debate on a target entry date.

Tusk’s cabinet plans a special meeting with President Bronislaw Komorowski, a fellow centrist, later in February.

Poland’s entry into the Eurozone was agreed as part of its 2004 EU accession treaty, but no deadline was set.

Komorowski recently suggested fixing an entry date should come after presidential and parliamentary elections in 2015.

Poland still has to meet the so-called convergence criteria of the EU’s Maastricht Treaty on a lower public deficit and inflation and push through difficult constitutional amendments before it is euro-ready.

Experts also insists further structural reforms are needed in public spending.

The Tusk government has vowed to make the all the necessary changes by 2015.

Finance Minister Jacek Rostowski announced on Friday a high-level debate on Poland’s Eurozone readiness for February 18, which he and Polish central bank chief Marek Belka are to attend.