GDP data released late last week, suggest that the Polish economy may avoid recession this year. That suggests that the risks to our forecasts for a 45% peak-to-trough fall in capital values may now lie to the upside. But with the economy facing a period of fiscal consolidation, the bigger picture is that GDP growth is set to remain sub-trend in 2010 and 2011. As a result, we still think that the adjustment in both commercial property initial yields and rental values has much further to run.
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