Turnaround Strategy for Poland
— Press release —
The Polish economy expanded strongly in the first quarter of 2022 with industrial production and retail sales growing steadily, accompanied by the wage growth and low unemployment. However, Russia's invasion of Ukraine will have major consequences for Poland.
According to the World Bank the gross domestic product (GDP) annual growth forecast for Poland is 3.9 percent in 2022, as the war in Ukraine is hitting hard its economy. Consumption and, to a lesser extent, investment growth is expected to slow considerably, partly offset by fiscal policy. Inflation is expected to peak by the end of the year as the rise in energy prices slows and monetary policy tightens.
Poland, which has welcomed close to 60 percent of refugees fleeing Ukraine, is expected to see a significant increase in demand for public services and housing, with pressures on public finances. On the upside, however, this could provide a boost to the economy in the short term via higher domestic demand.
According to Marek Wasinski, head of the foreign trade team at the Polish Economic Institute, diversity and size of the Polish economy is the key for its resilience during the crisis. Strong ties with German economy are also another factor shaping this success. Wasinski points to environmental technology as potentially the most interesting for future growth in Poland. The planned restructuring of the energy industry, away from coal and towards renewable energies, could be a major field of activity for German companies. Other sectors that one should keep an eye on are business and IT services. There is also a growing potential for cooperation in automation and digitization of the Polish economy and especially the manufacturing sector.
Though the Polish economy is expected to slow mid high inflation and uncertainty, a quick resolution of the war, on the upside, would increase GDP and reduce inflation.
(Source: FocusEconomics, OECD, The World Bank)