Poland’s Economy: Growth Is Steady Even Though A Decline Is Approaching
Poland’s economy, the largest one in central Europe, slowed down less than anticipated in 2022. Even as high inflation started to hurt demand more and more, it maintained steady growth throughout the year.
The economies of Central Europe began to be at risk of recession in the second half of 2022. They predict slowdowns in 2023 as the effects of high energy costs, the war in Ukraine, and reduced consumer spending become more apparent.
However, data released by the statistics office on Monday indicates that Poland started the new year slightly better than other countries. Poland’s gross domestic product increased by 4.9% annually last year, slightly higher than the 4.8% forecast in a Reuters poll.
Grzegorz Maliszewski, the chief economist at Bank Millennium, stated that “this extremely good outcome is to a considerable extent the effect of a very good first half of the year.” They added that economic growth clearly slowed down in the second part of the year as the effects of greater inflation and higher interest rates were apparent.
Double-digit inflation is eating away at workers’ salaries in Poland, and the surrounding area, which analysts claimed was evident in sluggish consumer activity even in full-year data. The statistics agency did not provide data in quarterly increments, and the fourth quarter’s flash estimates deadline is February 14.
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Analysts anticipate the Polish central bank to continue its steady rate policy this year. Since 2021, when annual cycles of rate hikes began, central banks in the region have worked to maintain a stable monetary policy to aid the economy through the recession. Poland’s central bank base rate, which is currently 6.75%, predicts 0.7% growth in 2023.
Poland’s growth is comparatively robust, but only by 2% or less than the EU average. Before it loses access to the cohesion fund, its per capita income must double. Low-income economies have it easier when it comes to high growth, which slows down with time. Other lower-income economies expand more quickly and increase average growth. Based on these numbers, Poland will need cohesion funds for another generation.
The ratio may be the same as in 2015, but the amounts of Euro and Polish Zloty at stake are different. And for everyday purchases, zeros and ones on computers are more important than paper, which only provides localized representation. If a nation’s economy collapses, its currency immediately reflects this. But the reverse does not apply. If a nation does well, its currency is, at least partly, what the issuer wants it to be.