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WARSAW, Feb 13 (Reuters) - Poland's 2009 economic growth could undershoot even the government's worst case scenario of 1.7 percent, the finance minister was quoted as saying on Friday, signalling the slowdown was sharper than earlier expected.
Jacek Rostowski also said he did not see a recession in the European Union's largest ex-communist economy even though the global crisis could be "long and difficult".
"I don't foresee recession but we must be and we are prepared for a worse scenario than 1.7 percent. Today we think such a probability is small, but it's not impossible," Jacek Rostowski told daily Gazeta Wyborcza in an interview.
The 2009 budget envisages gross domestic product growth at 3.7 percent but analysts expect it to come in at 1.4 percent and the government has already said it could lower the figure to 1.7 percent in the second half of the year.
"Its possible, that the crisis in western Europe and the United States will be long and difficult, it may last for 5-7 years," Rostowski said.
"But Poland may enjoy in those times relatively fast growth -- not 6-7 percent as in past years, but some 3-4 percent."
Rostowski also did not rule out increasing some taxes if budget revenues fell sharply and endangered obligatory spending or the budget deficit.
Earlier this month, the government approved a savings plan worth 19.7 billion zlotys and pledged not to increase 2009 budget deficit, set at 18.2 billion, even if the worst-case scenario materializes.
But some analysts said this may not be enough as budget shortfalls could be greater than savings proposed if growth slows to 1.7 percent.
ERM-2 AND ZLOTY
Rostowski also reiterated Poland's will to join the pre-euro exchange rate mechanism ERM-2 in the middle of the year, as stated in the government euro zone entry roadmap released last October.
"I have been saying since September that we would want to joint the ERM-2 in the middle of the year but only when the global financial markets are stable. At the moment, they are not."
The roadmap also envisages Poland would enter the euro zone on Jan. 1 2012.
In order to introduce the euro, a country must peg its currency against a central parity to the single currency for a minimum of two years and prove that its currency is stable and does not fluctuate more than 15 percent either way.
However the zloty has lost more than 30 percent since its peak against the euro in July which prompted some analysts to say it would be risky to enter the ERM-2 as this could encourage currency speculation.
Rostowski said once Poland was in the ERM-2, not only the national bank could intervene in case of moving too close to the bands but also the European Central Bank.
In another interview, for daily Rzeczpospolita, Rostowski said Warsaw would exchange some of the 60 billion euros ($77 billion) it expects to receive in EU funds until 2015 for zlotys on the FX market, to support the country's currency.
At 0700 GMT the zloty traded at 4.62 against the euro. (Writing by Gabriela Baczynska and Kuba Jaworowski; Editing by Jan Dahinten)