Poland will probably not enter a recession, understood as a prolonged decline in economic activity, although the annual GDP growth rate may be negative in Q1 of this year, according to National Bank of Poland (NBP) Deputy Governor and First Deputy Governor Marta Kightley.
“The monetary tightening that has taken place in Poland is very strong, and this can be seen, for example, in monetary statistics, including credit. It will continue and will be even stronger, as the impact of the credit vacation will weaken. On top of that, our economy will also be affected by the tightening of monetary policy around the Polish economy and the general downturn in the global economy. We probably won’t enter a recession understood as a prolonged decline in economic activity, although annual GDP growth may turn negative in Q1 of this year, which will also be helped by the high base from the beginning of last year,” Kightley said in an interview with Business Insider Poland.
“The projection shows us reaching the NBP’s inflation target in 2025, but keep in mind that the source of high inflation is still largely external factors, which further negatively affect the Polish economy. Everyone agrees that inflation should be permanently reduced. However, this should be done without triggering a prolonged recession and a significant increase in unemployment, which, through the hysteresis effect, could further reduce the potential of the Polish economy,” she added.
She reiterated the central bank’s earlier predictions, according to which we will probably see higher inflation in January and February, but from March it should decrease, and this trend should continue in the following months and years.
“I say: should, because no one can predict whether there will be another shock, an event that will change this scenario and cause another price increase. […] According to our latest projection, inflation will decline gradually – as in many countries, by the way – and will return to the medium-term target in 2025,” the vice president pointed out.
Earlier on Friday, the Central Statistical Office (GUS) reported that consumer inflation stood at 16.6% y/y in December 2022.
Source: Business Insider Poland and ISBnews
