EC forecasts Polish GDP growth at 4.9 pct in '21, 5.2 pct in '22
The European Commission has estimated Polish GDP growth at 4.9 percent this year, 5.2 percent next year and 4.4 percent in 2023 in a forecast released on Thursday.
The Commission said economic growth would remain strong in 2021-2023, citing increasing household income, a steady decline in the savings rate and support for personal income in the form of tax changes as factors that would probably increase private consumption in 2022 and, to a lesser extent, also in 2023.
The growth in investment expenditures is also seen as dynamic, thanks to the good financial standing of companies, the need to increase their production capacity and low financing costs, which is seen supporting the construction sector among others.
Exports will probably benefit from the economic revival of Poland's main trading partners, the EC said, with the balance of trade, however, seen negatively affecting GDP in 2021 and 2022, while strong domestic demand growth should increase imports.
The EC said the general government sector deficit would stand at 3.3 percent of GDP this year against 7.1 percent a year earlier, 1.8 percent in 2022 and 2.1 percent in 2023. Incomes, mostly from taxes and social security contributions, are seen rising sharply due to the reviving economy, conducive labour market conditions and cyclical factors.
On the expenditures side, significantly lower costs are expected, related to aid for sectors threatened by the coronavirus pandemic. However, additional expenditures related to the payment of a 14th monthly pension may increase the 2021 deficit by almost 0.5 percent of GDP. In 2022, the general government deficit is expected to fall to 1.8 percent of GDP, rising again in 2023 to 2.1 percent.
The EC forecasts public debt standing at 49.5 percent of GDP at end-2023, against 57.4 percent in 2020.
According to the EC, the risk factors for the Polish economy are: a higher-than forecast inflation rate as well as a sudden rise in Covid-19 infection figures, particularly in light of the relatively low level of vaccination in Poland.
The European Commission foresees HICP inflation reaching 5.0 percent at end-21, accelerating to 5.2 percent in 2022. In 2023, inflation is expected to reduce to 2.6 percent.
Growing prices of raw materials, rising demand, and supply-side problems have contributed to strong inflation growth in recent months, in the EC's view, with the trend seen continuing for the rest of 2021 and in 2022 chiefly as a result of rising energy prices and labour costs. Food prices are also predicted to continue to rise.
The Commission expects that the number of jobs in Poland will continue to rise in line with economic growth, though increasing problems with accessing labour will significantly limit the possibilities for employment growth. The Commission forecasts that the unemployment rate in Poland will stand at 3.3 percent at the end of 2021, falling to 3.0 percent at the end of 2023.
Wage growth is seen being maintained, driven by a shortage of new workers and a rise in the minimum wage in 2022.