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Poland’s GDP is expected to fall by 0.3 per cent in Q1 2023. However, the Polish economy will return to a growth path from Q2 onwards, and GDP for the whole of 2023 will be 1.2 per cent higher than in 2022, according to a report by the Polish Economic Institute (PIE).
As PIE experts pointed out in the ‘PIE Economic Review – Winter 2022’, GDP growth slowed from 8.5 per cent year-on-year in Q1 to 3.6 per cent in Q3, and current data shows “meagre growth in consumer spending and investment”. According to PIE analysts, GDP growth is based on inventories, and their reduction by companies and the poor performance of exporters will exacerbate the coming slowdown.
PIE expects that at the beginning of 2023 Poland’s GDP will decline by 0.3 per cent. Economic activity will instead pick up in the second half of the year due to an improvement in the euro area. “The projected growth is 1.3 per cent in Q3 and 2.5 per cent in Q4 next year.” For the whole of 2023, GDP will grow by 1.2 per cent relative to 2022.
According to the Institute’s estimates, CPI inflation will exceed 20 per cent in February 2023 due to the restoration of standard VAT rates on electricity, fuel and natural gas. From March onwards, CPI inflation is expected to start falling, but will still be slightly above 8 per cent by the end of the year, it was estimated. Averaging it out, inflation is expected to reach 13 per cent in 2023, according to experts, with core inflation making up the largest part of it, which is expected to oscillate around 11.5 per cent at the beginning of the year and to be around 7.8 per cent by the end of the year.
“Inflationary pressures are now fairly widespread. Almost 70 per cent of prices will rise at a rate of more than 10 per cent this year.” It added that prices will rise by an average of 6.4 per cent in 2024, as inflation will be increased by the withdrawal of the zero VAT rate on food.
According to PIE, the economic downturn appears to have had little impact on the pricing decisions of companies, which are adjusting their price lists in line with changing energy costs. It also found a record percentage of companies declaring wage demands. According to experts, this will have an impact on the increase in the prices of industrial goods and a rapid rise in the prices of services.
According to the Institute, food price increases will slow down in 2023 – from 22 per cent at the beginning of the year to 6 per cent by the end of the year. Prices of products that became more expensive after the Russian aggression are returning to normal, it added, and the threat of a food crisis appears to be lower than at the beginning of the conflict.
“According to PIE forecasts, the economic slowdown will result in a slight increase in unemployment. The unemployment rate will remain in the range of 5.5-6 per cent.” – the report stated. “In the first months of 2023, the increase will be the result of seasonal changes, but in the following months, it will reflect the weakening economy. The increase in the number of unemployed is likely to be higher in construction and industry,” it added.