Poland’s economy is expected to grow more rapidly than previously thought after the European Commission published its revised estimates for Polish economic growth on Monday.
The EU executive believes Polish GDP will grow by 0.7 percent in 2023 and 2.7 percent in 2024, up from the previous estimates of 0.4 percent in 2023 and 2.5 percent in 2024.
According to the commission, Poland will see inflation of 11.7 percent this year, while the inflation target for 2024 was increased from 4.4 percent to 6 percent.
Despite a strong performance in 2022, it is expected that economic growth will slow down due to tighter financing conditions, weak foreign demand, and declining levels of confidence.
Public spending as a percentage of GDP is to remain high compared to pre-pandemic years, making it impossible to restore balance to the budget of the government and local government sector, the European Commission warned.
EU officials predict that energy prices will continue to fall in 2023, aided by falling raw material prices, among other factors. Weakening domestic demand and high interest rates should lead to lower inflation in Poland.
However, inflation is anticipated to remain significantly above the central bank’s target due to wage growth (high labor costs), among other factors.
The European Commission projected that the Polish unemployment rate will only slightly increase to 3.3 percent in 2023, before gradually decreasing to 3.2 percent in 2024. It also expects wages to continue to rise rapidly, driven by the minimum wage and low unemployment rate.
Meanwhile, according to official data published by Statistics Poland (GUS), inflation has already shown signs of slowing down, falling sharply from 16.1 percent in March to 14.7 percent in April.