Economic forecasts backed by the support of the central bank NBP are predicting an unhappy new year. Perhaps this should come as no surprise given the optimistic hopes for 2001 which were dashed.
One year ago economists were predicting growth of four to 5.5 percent, inflation at six to 7.2 percent and unemployment at 14 — 15 percent. No-one foresaw the drastic drop in domestic demand and the global slow down. Of course no-one foresaw inflation at four percent either. But that may have a lot to do with the drop in demand.
Growth in 2001 will be little over one percent, the budget deficit is huge and unemployment stands at 17 percent. The government seems about to declare war on the independence of the central bank but despite this and reductions in interest rates of 7.5 percent in 2001, PLN remains one of the strongest currencies in Europe. Most economists seem to think that GDP growth will be close to two percent although this will be mainly in the second quarter and led by events abroad, above all in the USA. A fall in interest rates of between 2.5 and three percent is also considered likely. However most economists are strongly against political interference with the independence of the central bank which could see the return of inflation and a much higher trade deficit. Inflation of around five percent for the whole year is predicted. Unemployment is going to be the toughest problem and may reach twenty percent. This could have serious social consequences given that it is concentrated in certain areas. Government policy is not likely to change and encourage investments and job creation which in turn could lead to strikes and other demonstrations which will only serve to put off those investors who might otherwise be here.