Poland: Euro debate intensifies
The pace of expansion decelerated moderately in the first half of 2008 and recent data point to a further weakening of activity. Amid the global slowdown, growth is projected to fall below potential, although income tax cuts should support private consumption. With declining oil prices and persisting, albeit abating, demand pressures in labour and product markets, core inflation is expected to subside more gradually than headline inflation.
Fiscal policy has been somewhat expansionary in 2008, though significant under-spending on infrastructure investment has led to an unexpectedly low central government budget deficit. The debate over the adoption of the single currency has intensified. A structural improvement in the fiscal balance and a permanent reduction in inflation are key hurdles en route to meeting the Maastricht criteria.