Poland's GDP will drop by 4.6 pct in 2020, EU forecasts

The Polish economy will shrink by 4.6 percent in 2020 and will expand by 4.3 percent in 2021, as the HICP inflation declines to 2.7 percent in 2020 and edges up to 2.8 percent in 2021, the European Commission (EC) said in its Spring 2020 Economic Forecast.

In May's forecast, the EC expected Poland's GDP decline at 4.3 percent in 2020 and see a 4.1-percent increase in 2021.

According to the EC, despite Poland's government intervention and economic support, consumption in Poland in 2020 will suffer, as consumers will be more likely to save and refrain from shopping due to the uncertainty and threat of the coronavirus epidemic. "This, combined with broken supply chains and a drop in orders in March and April, and low confidence of entrepreneurs will probably have an impact on investment. The commission expects them to collapse in the second quarter and only a partial rebound is expected," EC said.

The experts also expect that the economic collapse of Poland's trade partners will have a negative impact on exports in 2020, as transport and tourism will suffer in particular.

"HICP inflation has significantly accelerated at the turn of 2019 and 2020, driven by a consistent rise in service and food prices. However, slower wage growth and weaker demand due to the COVID-19 pandemic will end the nearly two-year rise in inflation in the services sector and are expected to fall in the second half of 2020 and early 2021. In addition, a significant drop in oil prices in the first four months of the year should cause a drop in energy prices in 2020," the reports reads.