EBRD says Polish economy will shrink by 3.5 pct in 2020

Poland's economy will contract by 3.5 percent in 2020 due to the coronavirus pandemic and will return to a 4.0 percent growth in 2021, the European Bank for Reconstruction and Development (EBRD) said in its latest report.

"Despite its substantial domestic market, Poland is highly integrated into global value chains and has a large exposure to trade, especially within the EU. Therefore, the overall slump in demand for Polish goods from Western Europe, especially Germany (about 30 per cent of total exports), has already severely affected Polish exporters. The significance of small and medium-sized enterprises in employment also constitutes a risk. Micro companies represent 38 per cent of total employment, higher than the EU average of 30 percent," the EBRD said.

An improvement in the economic situation in Poland will depend on the gradual easing of domestic restrictions and a return to "normality" in the second half of 2020, the bank wrote.

The EBRD also said that "the Polish government announced several ‘anti-crisis shield’ packages, worth almost 15 per cent of GDP," which will help mitigate this year's recession.

Economies in the EBRD regions may shrink by 3.5 percent on average this year, with a potential rebound of 4.8 percent in 2021, but the forecasts are still extremely uncertain, the bank said.