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Central Banker Fears 'Permanent' Damage to Growth

The financial crisis might have sapped Europe's growth for a long time, and there are fears that the slowdown is permanent, Polish central bank governor Marek Belka told TVN CNBC Tuesday.

A double-dip recession scenario cannot be excluded, but it is not probable, Belka said.

"Of course we cannot exclude so called double-dip recession in Europe, but it’s not the most probable scenario," he said.

There is economic divergence in Europe, with some countries speeding up and others facing stagnation, Belka explained.

"What we fear most is permanent slowdown of GDP growth in Europe," he said. "We’re afraid that the crisis has permanently undermined Europe’s economy’s ability to grow."

Poland, the only European Union economy to have avoided recession last year, is forecast to grow by 3.1 percent this year.

Next year economic growth will remain "modest" at 3.5 percent, Belka said.

"It may, however, speed up to 4 percent. That of course would be very successful from the global perspective," he said. "Yet, if you look back, it’s not a very impressive one."

Polish bank PKO BP, which will take part in the European Union stress tests due to be published Friday, is solid, according to Belka.

"We should also separate the condition of foreign banks which own banks in Poland, such as Commerzbank and Unciredit, from the financial strength of Polish institutions themselves," he added.

Contact Europe: Economy

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