Page 7 - Poland Outlook 2022

of the 'zero Covid' policy in Asia) and the energy price shock made the bank
lower the GDP growth forecast in 2022 to 4.1% (from 5.1% forecasted
previously). It predicts that GDP growth in 1q22 will exceed 6% y/y (with strong
support from the low base effect) and then slow down towards 3-4% y / y.

PKO reiterated its assessment that private consumption will be the main driver
of GDP growth in 2022, although in the face of increased inflation, especially in

the area of so-called goods. basic necessity, its optimism about consumption
decreased (it made a downward revision by nearly 1pp).

The scale of the revision is limited by the stronger than previously forecasted
wage growth in 2021 and 2022. Investment recovery will still be moderate
(despite strong growth in 2h21, in 4q21 investments will only return to the level

from 4q19), especially in the area of private investment. The current delay in
the National Reconstruction Plan (lack of funds in 2021 will increase their pool
in 2022) should favour public investments.

For the first time in many years, such an important role in GDP growth is
played by inventories, which reflect the change of the production model from
just-in-time to just-in-case. Exports in 1h22 may be adversely affected by
events in the global economy, resulting in, inter alia, recession in Germany's
industry. It estimates that the domestic policy mix, expansive in 2021 (delayed
effects of fiscal transfers from 2020 and a decline in the real interest rate), will
be close to neutral in 2022.

3.2 External environment

Poland’s economic recovery is part of a global one, with an improvement of the
economic situation visible in most economies, including emerging markets.
That said, difficulties might occur in Germany – Poland’s key trade partner –
where supply constraints and rising costs (including of energy) could weigh on
manufacturing and services.

7 Poland Outlook 2022 www.intellinews.com