S&P lowers Poland's GDP growth forecast for 2022

Justin Lane/PAP/EPA

Rating agency Standard and Poor's (S&P) has downgraded Poland's economic growth forecast to 4.0 percent in 2022 from 4.5 percent.

At the same time, S&P has lowered its forecast regarding Poland's economic growth in 2023 from 2.1 percent to 1.2 percent, the company said in a report published on Wednesday.

The downward forecast revision "reflects a larger than expected contraction in Q2, increasing headwinds for private consumption from higher inflation, declining confidence amid worsening geopolitical conditions, and an expected downturn in the eurozone, which is Poland's largest trading partner," S&P said.

But Poland's expansionary fiscal policy, an inflow of Ukrainian refugees and "various government initiatives (such as a minimum wage increase)" are seen as likely to support the domestic consumption and thereby growth in 2023," S&P added

Inflation forecasts, on the other hand, were raised by respective 1.3 ppt and 1.5 ppt to 13.3 percent for 2022 and 11.5 percent for 2023.

The upward revision takes into account global inflationary pressures and recent high CPI readings, S&P said.

At the same time, the agency added that Poland is "less exposed to energy price shocks" due to its smaller dependence on gas in the energy supply mix. At the same time, core inflation readings suggest that the current high inflation in Poland may prove more persistent than was expected.

According to S&P risks to the forecast include "the escalation of the Russia-Ukraine conflict and further disruption to European energy supplies."