Fitch raises Poland's 2021 GDP growth forecast to 6.4 pct

Andrew Gombert/PAP/EPA

The Fitch ratings agency has raised its forecast for Poland's GDP growth in 2021 to 6.4 percent from the previous 5.7 percent, the Fitch Global Economic Outlook (GEO) - December 2021 report reveals.

Fitch also lowered its 2022 GDP growth prediction from 4.5 percent to 4.3 percent.

"A higher-than-expected GDP outturn in 3Q 21 and revisions to back data mean that Poland’s economy is now some 3.5 percent above its pre-pandemic level," Fitch wrote in the report.

"The 2.1-percent quarterly expansion exceeded September’s GEO forecast of 1.3 percent qoq while the combined revisions to 1Q21 and 2Q21 growth added 0.6pp to this year’s GDP," Fitch added.

"As such, we expect the economy to grow by 6.4 percent rather than 5.7 percent while aggressive monetary policy tightening is likely to lower GDP to 4.3 percent in 2022 (4.5 percent before)," the report continued. "In 2023, the economy is forecast to grow 3.5 percent (3.8 percent previously)."

Fitch analysts expect that in the first months of 2022, inflation in Poland will peak at 8 percent.

"With an output gap that is closing fast and is expected to turn positive in 2022 (on Fitch’s estimates), inflationary pressures are increasing," Fitch commented. "CPI rose to 6.8 percent in October lifting our end-of-year 2021 forecast to 7.8 percent (from 4.8 percent before). We expect inflation to peak at 8% percent early in 2022 and to moderate through the course of next year but remain above the National Bank of Poland’s (NBP) target of 2.5 percent (+/- 1pp). Consumer and business surveys show inflation expectations continuing to rise."

The report also said that Fitch economists expect CPI inflation to stand at 4.0 percent at end-2022.