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2021/12/02 / Erste Group Research

Growth dynamics to normalize further

Growth dynamics to further normalize in coming quarters. Economy to slow down to 4.6% in 2022 on the back of weaker private consumption and investment growth. Inflation remains in the spotlight. Central bank will continue to tighten monetary conditions.

The Polish economy already returned to its pre-pandemic level in 2Q21 and continued to expand at a robust pace over the summer, as 3Q21 GDP arrived at 5.3% y/y. We see growth dynamics at a solid 5-5.5% y/y in the last quarter and FY21 growth should thus land at 5.3%. Next year, the economy should slow down to 4.6%. Elevated inflation and the subsequent tightening of monetary conditions will drag private consumption down, while any further delay in the disbursement of funds from the EU Recovery Plan and risks related to the ongoing dispute with the EU will negatively affect investment activity. On the other hand, tax changes introduced as of the beginning of next year should increase the disposable income for lower- and middle-income households.

Headline inflation continues to surprise on the upside and we expect it to remain outside of the central bank’s tolerance band in the coming quarters. Recently, the government announced a set of tax cuts to lower energy bills for households at the start of the year. The proposed measures include cuts in VAT and excise duties on electricity, gas and fuels and should decrease headline CPI by around 1-1.5pp compared to the no-policy change scenario. Nevertheless, average inflation should land at 6.0% in 2022 before easing toward 3.5% in 2023. The interest rate outlook for Poland remains highly uncertain and will strongly depend on short-term inflation developments. We continue to think that the peak of the current tightening cycle will be reached at 2.5-3.0% by mid-2022.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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