Bank PKO BP forecasts GDP growth at 0.5 pct this year, 3 pct next

Poland's GDP will grow by 0.5 percent this year and in 2024 by 3 percent, according to a forecast by bank PKO BP, released on Monday.

The bank's analysts said the economic downturn had already bottomed out.

"We maintain that the bottom of the economic downturn occurred in the second quarter and in the one just passed, the third, the annual dynamic was already positive," the bank's chief economist, Piotr Bujak, told a press conference.

The bank put Q3's growth at 0.4 percent and Q4's at 2.2 percent with the figure for the full year standing at 0.5 percent.

"In the whole of 2024 we expect GDP growth at the level of 3 percent," Bujak said.

Bujak attributed the acceleration of growth to consumption due to a good situation on the job market despite signs of declining demand for labour, i.e. fewer vacancies and a worsening employment dynamic.

"The good situation on the labour market creates good grounds for a rebound in consumption," Bujak said. "Salaries are rising at a two-figure rate, inflation is still in single figures and will fall. This helps retail sales."

"We predict that by the end of the year the consumption dynamic will start to improve," he continued. "We believe that the real consumption dynamic will improve by 5 percentage points - from minus 1 percentage point in 2023 to plus 4 in 2024."

The bank said that despite the growth in consumption, inflation would continue to fall.

"In spring 2024 we will see inflation at the level of about 4 percent," PKO economist Marta Petka-Zagajewska said. "But in December 2024, inflation will still stand at about 4 percent."

The bank's analysts said lower inflation would be accompanied by falling interest rates.

"We think that at the end of this year, interest rates will fall to 5.5 percent and to 4.5 percent at the end of next year, specifically at the end of the first half of 2024," Bujak said.