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2020/04/01 / Erste Group Research

Economy to contract this year

The current crisis is broad-based and will have a strong negative impact on the global as well as Polish economy. Unlike during the financial crisis of 2008, Poland will most likely not remain the ‘green’ island of Europe.

The implemented measures to curb the spread of coronavirus and subsequent lockdown of the economy will weigh on the growth this year. We expect the GDP growth to land at -3.7% this year and rebound to above 3.0% in 2021. At this moment, we expect the lockdown to last until the end of April, but its potential prolongation poses negative risks to our forecast.

The National Bank of Poland joined the global central banks and eased monetary policy to support economic growth amid the spread of COVID-19 and introduction of lockdowns. The MPC cut the reference rate by 50bp to a record-low level of 1.0% and introduced the unconventional monetary policy measures. In the face of recession, the central bank should deliver another 50bp cut in 2H20.

The shock related to the spread of COVID-19 will affect public finances and we think that the government’s ambitious plan for a balanced budget in 2020 will not be possible to achieve. Slowing economic growth will reduce tax revenues this year, while the rescue package presented by the Polish government will add to the deficit this year. We expect the budget deficit to increase to 7.7% of GDP.

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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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