Country Report Poland October 2017

Country Report Poland October 2017

  • October 2017 •
  • Report ID: 325912 •
  • Format: PDF

Outlook for 2018-22

  • A series of contentious reforms implemented by the government led by the Law and Justice (PiS) party has undermined the country's democratic institu-tions, polarised public opinion and strained Poland's relationship with the EU.
  • The government's failure to address rule of law issues could lead the European Commission to initiate Article 7 proceedings against Poland. However, The Economist Intelligence Unit expects Hungary to veto such proceedings.
  • In the event that the Commission does initiate Article 7 proceedings, this could result in sanctions, limits on EU funds and withdrawal of voting rights.
  • The government has abandoned plans to force the conversion of foreign-currency-denominated loans and will set up a restructuring fund instead.
  • We estimate that real GDP growth will reach 4.3% this year, up from 2.7% in 2016, driven primarily by robust private consumption.
  • Amid a firmer trend of (partially EU-funded) investment, we forecast average annual real GDP growth of 3.4% in 2018-22.
  • Price pressures remain modest and we estimate that inflation will average 1.8% in 2017. The current-account deficit will expand moderately to 0.6% of GDP as stronger domestic demand pushes up import volumes.


  • On September 25th Andrzej Duda, the president, proposed new, amended versions of the controversial judiciary laws that he vetoed on July 24th.
  • On September 11th-12th the Supreme Court and the Constitutional Tribunal clashed over whether the court had the competence to control the Tribunal.
  • On September 11th parliament's legislative bureau released an opinion supporting demands for Germany to pay wartime reparations to Poland.
  • During a visit to central and eastern Europe on August 23rd-25th Emmanuel Macron, the French president, made pointed criticisms of the Polish government, which he described as "nationalist" and "Eurosceptic".
  • In August retail sales grew by 6.9% year on year, after 6.8% growth in July.
  • Also in August industrial production (excluding construction) expanded by 8.7% year on year, compared with 6.3% in July. Construction grew by 22.6%.
  • In July the current-account deficit (non-seasonally adjusted) expanded by 67% year on year, to Zl 3.7bn (US$1bn), owing to a widening of the trade deficit.
  • Consumer price inflation rose by 0.1 percentage point year on year in August, to 1.8%. However, core inflation slowed by 0.1 percentage point, to 0.7% year on year.


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