Page 6 - Poland Outlook 2022

3.1 GDP growth

2022 is set to continue with economic recovery although the pace of it is
expected to become less volatile. That said, growth will likely remain close to
5%, an impressive result. Economic growth will only ease in 2023 in the
aftermath of monetary tightening, which began in late 2020.

Key components of GDP will perform in a mixed fashion. Household
consumption is likely to expand in 2022 so long as savings rates normalize.
The caveat to that is the rising cost of living and credit, which will eventually
hold back spending – not just because people’s utility bills will increase but
also due to a wide range of public services also becoming more expensive.
The market forecast for household consumption growth in Poland in 2022 is at
around 5%.

Private investment should remain in rapid recovery mode, but public
investment will most likely lag behind, as it remains unclear when the EU will
eventually greenlight Poland’s plan to spend billions from the bloc’s pandemic
recovery fund. That, in turn, hinges on progress Poland might be willing to
make in the rule of law dispute with Brussels. The current outlook is that the
main party of the ruling coalition, Law and Justice (PiS) is being held hostage
by the junior partner, United Poland, without which the coalition would
collapse. Investment is expected to grow around 7% in 2022.

Exports will likely be supported by good economic conditions abroad and the
favourable EUR/PLN exchange rate.

Risks to GDP growth are numerous, however. The coronavirus pandemic is far
from over, with the omicron variant yet to hit Poland, threatening stability of
healthcare, the availability of workforce, and – possibly – thwarting growth in
sectors such as retail if the government decides on a lockdown.

The spat with the EU could spiral out of control, with Poland remaining without
funds from the pandemic recovery facility throughout 2022, fuelling anti-EU
sentiment at the same time.

The current tightening cycle might also prove ineffective, prompting an even
more radical response, which would stifle consumption, lead to an increase in
the unemployment rate, and slow down economic growth decisively.

Finally, escalation of geopolitical tension in the region, especially again on
Poland’s border with Belarus or because of Russia invading Ukraine could deal
a blow to consumer sentiment, scare investors, and weaken the zloty.

A notable caveat to the dominant outlook was presented by Poland’s largest
bank, state-controlled PKO BP.

The accumulation of pandemic threats (a combination of a new variant, an
increase in infections in Western Europe and a return to partial restrictions)
and the resulting weakening of growth in the global economy (e.g. as a result

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