OECD expects Polish economy to grow by 5% in 2021 and 2022

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WARSAW, Nov 22 (Reuters) - Poland's economy is expected to grow by about 5% both in 2021 and 2022, the Organisation for Economic Cooperation and Development said on Monday, while pointing to the need to reduce fiscal support given the good economic situation.

There are still a lot of downside risks in terms of the pandemic, but Poland is in a very strong position despite inflationary pressures, OECD Secretary-General Mathias Cormann told reporters during a visit to the country.

"At this stage our expectations is that you will have about 5% growth in Poland in 2021, about 5% growth give or take in 2022 and for growth to start easing a little from 2023 onwards, but still remaining strong," he said.

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In May the OECD said it expected the Polish economy to grow by 3.7% in 2021 and 4.7% in 2022.

"In terms of inflationary pressures, some parts of inflationary pressures we believe are going to be temporary, but there is some core inflationary pressure and there is some potential wage inflationary risks that will need to be monitored and responded to carefully," Cormann said.

Polish CPI reached 6.8% year on year in October, prompting the central bank to raise its main interest rate this month to 1.25% from 0.5%.

Cormann said that given the strong performance of the Polish economy, the government should consider potentially reducing the current high level of fiscal support.

While a large part of pandemic support has been wound down, Poland has a low retirement age and relatively high benefits for parents compared with the minimum wage, potentially making a return to the workforce less attractive.

"The key is going to be among other things to find ways to boost productivity and workforce participation, because you're starting to have some skills shortages, labour shortages in some sectors," Cormann said.

"It's going to be important to mobilise all of the labour resources that are there in the economy and potentially even to supplement that and the level of fiscal support will need to be carefully adjusted to take into account the situation".

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Reporting by Anna Wlodarczak-Semczuk; Editing by Alan Charlish and Alison Williams

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