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UPDATE 1-Poland sees growth slowing as Ukraine war hits economy

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WARSAW, April 26 (Reuters) - Growth in Poland will slow in 2022 and 2023, based on finance ministry forecasts published on Tuesday, as the largest economy in the European Union’s eastern wing grapples with the impact of Russia’s invasion of Ukraine.

Poland bounced back strongly from the COVID-19 pandemic, but now faces disruption to trade and supply chains as well as surging inflation as a result of the conflict.

Meanwhile, a dispute with Brussels means Warsaw is still waiting for crucial COVID recovery funds.

“The outbreak of war in Ukraine worsened the assessment of the economic growth prospects,” the finance ministry said in a statement.

The Polish economy should grow in real terms by 3.8% in 2022 and 3.2% in 2023, the finance ministry said, as it presented the assumptions in the convergence plan it sends to the European Commission every year.

Poland posted gross domestic product (GDP) growth of 5.9% in 2021, according to statistics office data.

“In the following years, the Polish economy will grow at a rate of 3.0% and 3.1%,” the ministry said. “More dynamic economic activity would be possible thanks to the implementation of the National Recovery Plan.”

The European Union has yet to approve Warsaw’s National Recovery Plan, which is necessary to unblock the 36 billion euros ($38.40 billion) in COVID recovery funds, due to a dispute over judicial reforms the bloc says undermine the independence of the courts.

The ministry sees average CPI of 9.1% in 2022, 7.8% in 2023 and 4.8% in 2024, it said.

The disruption caused by the war in Ukraine has helped push Polish inflation into double digits this year for the first time in more than two decades.

The finance ministry expects a budget deficit of 4.3% in 2022 and 3.7% in 2023.

Russia calls its actions in Ukraine a “special operation” to disarm Ukraine and protect it from fascists. Ukraine and the West says this a false pretext for an unprovoked war of aggression by President Vladimir Putin. ($1 = 0.9374 euros) (Reporting by Pawel Florkiewicz and Alan Charlish. Editing by Jane Merriman)

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