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updated: 8/30/2011 7:32 AM

Polish economy grows 4.3 pct on the year in Q2

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Associated Press

WARSAW, Poland -- Poland's economy grew 4.3 percent year-on-year in the second quarter, a slight slowdown over previous quarters but still one of the strongest growth rates in Europe.

Economists, however, warned that Poland's economy is starting to be battered by new troubles in the world economy, problems not visible yet in the figures for the April-June period that were released Tuesday.

A loss of momentum is expected to be seen in third quarter figures, economists warned.

Poland's strong growth is attributed in part to the EU subsidies and massive foreign investments it has received since joining the European Union in 2004. And as the largest of the new EU members, with a population of 38 million, it also has a large consumer market that powers the economy, leaving it less dependent than neighbors like Hungary on exports to keep growing.

Still, Poland trades extensively with neighboring Germany and economists were eager to see if a recent slowdown there would take the edge off Poland's strong growth.

Growth of 4.3 percent, however, was better than the 4.2 percent that many economists had expected. The previous two quarters saw growth of 4.5 percent and 4.4 percent.

Adam Antoniak, an economist with Bank BPH, said Poland will not be immune from the "increasingly distressing news regarding prospects for the world economy" and he expects the pace of growth in the third quarter to "decline markedly."

Data released Tuesday showed that growth in individual consumption slowed for the second quarter in a row while the growth rate of public consumption fell for the first time on record, Antoniak said.

Poland was the only European nation to avoid a recession during the global financial crisis, a fact the government of Prime Minister Donald Tusk often boasts about -- as Tusk did in Brussels on Tuesday.

Holding up a small map of Poland overlaid with the 4.3 percent figure, Tusk said he was happy to boast of the strong number. He credited the EU and his own government for using EU funds well.

"One source of growth, not only in Poland, are the European funds, European aid put to good use," the news agency PAP quoted him as saying.

Still, while Poland's growth figures look impressive, the country is still much poorer than its Western European neighbors. Trains and roads remain dilapidated, and many people have been unable to make the transition from a communist to market economy 22 years ago, adding to a high unemployment rate of about 11 percent.

With job prospects bleak and wages low, many Poles have left to work in Western Europe, especially Britain, in recent years.