By Adrian Krajewski and Kuba Jaworowski
WARSAW, Jan 28 (Reuters) - Poland's economy grew 1.7 percent last year, data showed on Thursday, bucking a slump in the rest of the European Union and helped by a weak currency, which gave exporters an advantage over euro zone competitors.
Prime Minister Donald Tusk was quoted as saying on Thursday that the economy is poised to grow by more than 2 percent this year. However, economic reform is still required before the government can realise a plan to adopt the euro currency and Tusk declined to give a target date for euro zone entry.
The GDP data for last year, which confirmed a Reuters report on Jan. 21, was slightly above forecasts for 1.6 percent growth. Growth was also helped by private consumption and public investment, which was mostly co-funded by the EU.
'I think there was a lot of recovery in household consumption into (the) year end, combined with stronger export demand and inventory restocking which meant the economy bounced back quicker than expected,' said Peter Attard Montalto, emerging markets economist at Nomura International in London.
'Interest rate cuts have also continued to filter through during the second half.'
The zloty held onto gains after the GDP data and was up 0.7 percent against the euro in the afternoon. The Warsaw stock market was down 0.4 percent, tracking a downturn in European equities.
The central bank has cut rates by 250 basis points since November 2008 to a record low 3.5 percent to cushion the impact of the global economic downturn.
WEAK ZLOTY
A weak zloty -- which last year fell as much as 30 percent against the euro from an all-time high in 2008 and has only recovered half those losses -- helped Poland's export sector last year. The country is also less export reliant than smaller neighbours such as the Czech Republic and Slovakia, which meant it was less exposed to depressed global demand.
Tusk was quoted on television on Thursday as saying that GDP growth above 2 percent this year was 'realistic'. This would be well above the government's forecast in its budget of 1.2 percent. Analysts polled by Reuters forecast 2.6 percent growth.
Tusk was also quoted as saying he would not run in this year's presidential election because he wanted to focus on crucial fiscal reforms as head of government. In Poland, the government runs the country, though the president can veto laws.
For an analysis of Tusk's decision not to run for president, double click on
The government has scheduled a news conference for Friday to present a fiscal consolidation plan, which Tusk said would include a spending anchor.
The EU's largest ex-communist member is currently in breach of most euro entry criteria, including inflation which is too high at 3.5 percent in December. Analysts expect it to fall towards the central bank's target rate of 2.5 percent in coming months, but they still expect the bank to raise interest rates in the second half of this year to counter inflation pressure.
In an interview with the Financial Times on Thursday, Tusk declined to give a target date for euro adoption. Analysts say 2014 is the earliest likely date.
Central bank governor Slawomir Skrzypek said on Thursday that euro entry inflation criterion may not be so difficult to meet.
'As far as the inflation criterion is concerned, I believe we will meet it already in 2010 and in 2011... Fiscal problems will be the main obstacle,' Skrzypek said.
Public debt is now below a ceiling of 60 percent of GDP set by the EU, but it is rising fast. The government forecasts debt this year will rise but still be just below 55 percent of GDP. Analysts say it will be much higher, potentially triggering painful spending cuts under Polish debt containment rules and possibly stifling the fledgling economic recovery.
For a breakdown of Poland's 2009 GDP growth, click on
(Additional reporting by Gabriela Baczynska and Pawel Sobczak, writing by Gareth Jones and Kuba Jaworowski; editing by Susan Fenton) Keywords: POLAND GDP/ (gareth.jones@thomsonreuters.com, RM: gareth.jones.reuters.com@reuters.net, tel +48 22 653 9718) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WARSAW, Jan 28 (Reuters) - Poland's economy grew 1.7 percent last year, data showed on Thursday, bucking a slump in the rest of the European Union and helped by a weak currency, which gave exporters an advantage over euro zone competitors.
Prime Minister Donald Tusk was quoted as saying on Thursday that the economy is poised to grow by more than 2 percent this year. However, economic reform is still required before the government can realise a plan to adopt the euro currency and Tusk declined to give a target date for euro zone entry.
The GDP data for last year, which confirmed a Reuters report on Jan. 21, was slightly above forecasts for 1.6 percent growth. Growth was also helped by private consumption and public investment, which was mostly co-funded by the EU.
'I think there was a lot of recovery in household consumption into (the) year end, combined with stronger export demand and inventory restocking which meant the economy bounced back quicker than expected,' said Peter Attard Montalto, emerging markets economist at Nomura International in London.
'Interest rate cuts have also continued to filter through during the second half.'
The zloty held onto gains after the GDP data and was up 0.7 percent against the euro in the afternoon. The Warsaw stock market was down 0.4 percent, tracking a downturn in European equities.
The central bank has cut rates by 250 basis points since November 2008 to a record low 3.5 percent to cushion the impact of the global economic downturn.
WEAK ZLOTY
A weak zloty -- which last year fell as much as 30 percent against the euro from an all-time high in 2008 and has only recovered half those losses -- helped Poland's export sector last year. The country is also less export reliant than smaller neighbours such as the Czech Republic and Slovakia, which meant it was less exposed to depressed global demand.
Tusk was quoted on television on Thursday as saying that GDP growth above 2 percent this year was 'realistic'. This would be well above the government's forecast in its budget of 1.2 percent. Analysts polled by Reuters forecast 2.6 percent growth.
Tusk was also quoted as saying he would not run in this year's presidential election because he wanted to focus on crucial fiscal reforms as head of government. In Poland, the government runs the country, though the president can veto laws.
For an analysis of Tusk's decision not to run for president, double click on
The government has scheduled a news conference for Friday to present a fiscal consolidation plan, which Tusk said would include a spending anchor.
The EU's largest ex-communist member is currently in breach of most euro entry criteria, including inflation which is too high at 3.5 percent in December. Analysts expect it to fall towards the central bank's target rate of 2.5 percent in coming months, but they still expect the bank to raise interest rates in the second half of this year to counter inflation pressure.
In an interview with the Financial Times on Thursday, Tusk declined to give a target date for euro adoption. Analysts say 2014 is the earliest likely date.
Central bank governor Slawomir Skrzypek said on Thursday that euro entry inflation criterion may not be so difficult to meet.
'As far as the inflation criterion is concerned, I believe we will meet it already in 2010 and in 2011... Fiscal problems will be the main obstacle,' Skrzypek said.
Public debt is now below a ceiling of 60 percent of GDP set by the EU, but it is rising fast. The government forecasts debt this year will rise but still be just below 55 percent of GDP. Analysts say it will be much higher, potentially triggering painful spending cuts under Polish debt containment rules and possibly stifling the fledgling economic recovery.
For a breakdown of Poland's 2009 GDP growth, click on
(Additional reporting by Gabriela Baczynska and Pawel Sobczak, writing by Gareth Jones and Kuba Jaworowski; editing by Susan Fenton) Keywords: POLAND GDP/ (gareth.jones@thomsonreuters.com, RM: gareth.jones.reuters.com@reuters.net, tel +48 22 653 9718) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.