Poland’s economy slows to a crawl

photo - glowimages

"In the first quarter of 2013, there was slightly lower growth than in the fourth quarter of 2012,” GUS said in a statement, adding that the growth was due to an increase in net exports while domestic demand fell.

The new data confirms that after years of strong growth, Poland’s much-vaunted ‘green island’ economy has slowed.

In 21 EU nations that have released first quarter data, eight, including Poland, the UK and Baltic states, reported some growth with 12 economies flat lining or shrinking.

Meanwhile, the OECD said Wednesday that the eurozone will shrink this year by 0.6 percent, down from the minus 0.1 percent growth it forecast just six months ago.

The organization’s chief economist, Pier Paolo Padoan, told Reuters that “Europe is in a dire situation”.

The OECD cut Poland's growth forecasts for this year and next year to 0.9 and 2.2 percent from 1.6 and 2.5 percent, citing a weak labour market as a key factor for the slowdown.

The OECD recommended that the National Bank of Poland should cut interest rates further to stimulate demand.

"Given the persistent weakness, further monetary policy easing is appropriate," it said.

The central bank has reduced interest rates by a total of 1.75 basis points since November, though the Monetary Policy Council has come under fire from finance minister Jacek Rostowski for being too cautious and too slow with monetary easing. (pg)