EBRD sees Poland's growth at 0.6 pct in 2023

The Polish economy will expand by 0.6 percent in 2023 and 3 percent in 2024, the European Bank for Reconstruction and Development has said in its latest forecast.

In its "Regional Economic Prospects" report for May 2023, the EBRD said that Polish economic growth in 2023 and 2024 would be below last year's.

"The Polish economy proved resilient in 2022, growing by 5.1 per cent, as investment expenditures expanded by 4.5 per cent, despite elevated financing costs and tightening bank lending," the bank said. "The growth momentum significantly slowed down towards the end of 2022 and in the first months of 2023. Weaker private consumption, reflecting the rapidly rising cost of living, a slowdown in public expenditure growth and negative net exports, have been weighing on growth.

"GDP growth in Poland is forecast to drop to 0.6 per cent in 2023, recovering to 3.0 per cent in 2024," the EBRD said.

"The second half of 2023 could see improved economic figures, as tax cuts passed in 2022, together with a potential pre-election spending spree, could boost domestic demand," the EBRD added.

According to the bank, Poland's inflation rate will remain above the central bank target of 2.5 percent well into 2025.

The EBRD said the Polish banking system seemed resilient but in the long term the unresolved issue of Swiss franc-denominated mortgages was a reason for concern.

"The Polish banking system appears to be resilient in terms of capital coverage, supervision and liquidity. In the longer term, unresolved legacy issues related to Swiss franc-denominated mortgages, and the practice of ad-hoc regulatory changes such as mortgage moratoria may weigh on banks' lending appetite. This is a source of concern given the large private-sector investment needs, including to fund energy generation projects," the bank warned.