In 2020 economic contraction of Poland due to the coronavirus pandemic has been estimated by atradius at -2,8%, much less deep than the average EU recession (-6,4%). This rather low decrease is due to the fact that Warsaw's economic performance depends on exports to a lesser extent than Central European partners such as the Czech Republic, Hungary or Slovakia. At the same time, i private consumption they account for 58% of GDP, thus reducing vulnerability to external shocks (as evidenced in avoiding recession during the 2009 credit crisis). In 2021 analysts predict a rebound in the economy by +3,8%, as the current wave of coronavirus infections can be contained and the vaccination process implemented on time.
In this scenario, the increase in government subsidies to families and retirees, together with tax breaks, continue to support private consumption, while unemployment is expected to level off. Polish exports they are expected to rebound by +9% after a 1,9% contraction in 2020, supported by Eurozone demand. Industrial production and investments dthey should grow this year by +10,6% and +3,2%, respectively.
In order to support the economy, the Central Bank has lowered the interest rate benchmark three times in early 2020, to an all-time low of 0,1% since last May. This accommodating stance is currently aided by one less inflation, which fell to 2,4% last December, below the average target of 2,5%. An inflation rate of 2,6% is expected this year.
in 2020 fiscal stimulus measures related to the coronavirus accounted for about 12% of GDP. In order to support liquidity in the sectors that suffered the most in the second wave of the pandemic, the government launched an additional stimulus package in January called “Financial Shield 2.0” to provide support mainly to SMEs active in 50 sectors, worth €2,9 billion. It should also not be forgotten that Poland will also greatly benefit from the “Next Generation EU” to help countries recover from the recession with additional grants: the Warsaw government plans to use them as public investments in infrastructure, energy and digitalisation.
Due to global stimulus measures, last year the budget deficit it increased to 8% (from 0,8% in 2019) and a new increase is expected in 2021, equal to 5% of GDP. During the same period, the debt, which has risen to 54% of GDP (from 47%), has nevertheless confirmed itself as sustainable. And while the latter is subject to some currency risk and vulnerable to international investor confidence, its composition nonetheless remains low-risk.
