EU says Poland's economy set to grow by 5 per cent in 2006

Poland's economy will grow by 5 per cent in 2006 as part of a European Union-wide recovery, the European Commission said Wednesday. Economic forecasts unveiled by the EU's executive body said the new Polish growth estimates were 0.5 per cent higher than initially expected.

"The ongoing recovery is based on robust gross fixed capital formation, supported by healthy corporate profits and solid external demand, the commission said.

It added that construction activity in the country was strong and a recovery in the labour market was supporting growth.

In the first half of 2006, the unemployment rate declined by 2 percentage points to 16 per cent and the improvement is expected to continue in the second half of the year, albeit at a somewhat slower pace, the commission said.

However, the commission cautioned that higher wage demands, fuelled also by emigration, which created bottlenecks in certain segments of the labour market, would put upward pressure on inflation in the second half of 2006.

"Thus, inflation for 2006 has been revised to 1.3 per cent, up from 1 per cent," it said.

The commission's assessment is part of a review of the state of the EU's largest economies which, in addition to Poland, include Germany, Spain, France, Italy and Britain.
Source:rawstory.com