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Poland: General elections in Poland: is a major shift in store?

October 1, 2015

The general elections that will take place in Poland on 25 October are set to be a showdown between the ruling Civic Platform (PO) party and the opposition Law and Justice (PiS) party. Following the surprise victory of PiS’ candidate Andrzej Duda in the presidential elections that took place on 10 and 24 May, polls have consistently given a small lead to PiS in the general elections, suggesting that a major shift in Poland’s political landscape might be taking shape. The PO has been comfortably ruling the country since 2007 yet this is expected to be a close call and polls failed to predict the victory of Duda in the previous elections.

The PiS, as opposed to the PO, which is a pro-European and center-right party, has a strongly a nationalist and slightly eurosceptic ideology. The PiS has campaigned heavily on nationalist policies, including increasing taxes on foreign retail chains, protecting industries that are threatened by international competition and increasing the tax burden on the banking sector. It proposes increasing subsidies for those with children and lowering the retirement age. Such measures, which have not been accompanied by clearly-defined revenue-generating arrangements, threaten to widen the budget deficit.

A victory of the PiS would likely cause bond yields to increase right away and would also devalue the zloty as markets fear the negative impact of the party’s nationalist and, to a certain extent, populist policies. In the medium-term, banking and retail taxes could drag on growth due to a loss of international attractiveness. In addition, reducing the retirement age would further diminish the labor force in an already-aging population. However, it remains to be seen how far the new government would go in actually carrying out its electoral promises.

The Central Bank expects GDP to expand 3.6% in 2015 and 3.4% in 2016. FocusEconomics Consensus Forecast panelists expect that the economy will expand 3.5% in 2015, which is down 0.1 percentage points from last month’s forecast. For 2016, panelists foresee the economy growing 3.6%.


Author:, Economist

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