Polish GDP will drop by 3.4 pct in 2020, gov't says in EU report
The Polish economy will contract by 3.4 percent in 2020 due to the coronavirus pandemic, the Polish government predicted in an updated Convergence Programme, an EU-required fiscal plan for the next three years.
The Convergence Programmes need to be prepared by non-euro EU member states every April to show a snapshot of their fiscal policies and prevent the emergence of any fiscal difficulties. Euro zone members are required to provide reports called Stability Programmes.
This year, the European Commission, the EU's executive body, decided to reduce reporting requirements for this year's stability and convergence programmes due to the coronavirus pandemic as it expects EU members to focus on fighting the coronavirus crisis.
The Polish GDP will go down for the first time since the early 1990s, the Finance Ministry said.
The general government deficit will surge to 8.4 percent of GDP from 0.7 percent in 2019 due to government relief programmes, the ministry added.
The country's debt will increase to 55.2 percent of GDP.
Both private consumption and investments are expected to take a hit, particularly private investments, and a sharp decline in foreign demand for products and services will curb exports, the ministry said. However, lower domestic demand will translate into reduced imports and, as a result, net exports should add to GDP, it added.
Annual average inflation is expected to ease to 2.8 percent due to lower business activity and weaker labour market.
The GDP growth is expected to be bigger next year compared to this year's drop, but inflation pressure will remain weaker compared to 2020.