Page 11 - Poland Outlook 2022

4.0 Real Economy

4.1 Retail

Throughout 2021, private consumption managed to come back to the
pre-pandemic level as the subsequent waves of the coronavirus did not lead to
the government imposing restrictions other than the – commonly ignored –
masks, social distancing, and capacity limits in stores.

Faster than expected recovery of the labour market – which did not weaken
much anyway – accompanied by a strong increase in wages and the release
of pent-up demand on the back of surplus savings accumulated during
lockdowns, led to consumer spending booming for durable goods initially and
later also for services.

In effect, private consumption was the main driver of the economy and
regained its pre-pandemic strength as soon as in the second quarter,
eventually growing 5.8% in 2021 overall, compared to 4.2% expected at the
end of 2020.

There are solid grounds for consumption to maintain growth and remain a solid
pillar of the economy in 2022, although its growth dynamics will decrease to
below 5%. Households’ financial situation should remain good, although
purchasing power will suffer somewhat because of high inflation, interest rate
hikes, and the overall rise in the costs of living. Draining of savings
accumulated during lockdowns will also be a negative factor.

Data on retail sales indicate a permanent change in Polish consumers’
purchasing habits to the advantage of online retailing even during periods of
the weakened pandemic in the summer. This suggests that the possible
intensification of the pandemic and the tightening of restrictions should not
cause a strong decline in consumption. Spending will be additionally fuelled by
changes introduced by the Polish Deal – the government’s overhaul of the tax
system plus some changes to welfare payouts – worth PLN20bn in total, as
well as the PLN3.5bn anti-inflation package. Those will outweigh the negative
impact of interest rate hikes.

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