Next year may bring stagflation in Poland: the president of PFR

The first effect of the war in Ukraine and the sanctions against Russia will be a further increase in inflation, and in 2023 the Polish and global economy may enter a period of stagflation, according to Paweł Borys, President of the Polish Development Fund.

"The stagflation scenario next year is realistic, both globally and in our country, although it does not necessarily have to be a long-term phenomenon. To lower inflation, economic growth will have to be cooled, and inflation at the current levels of commodity prices and the uncertainty related especially to food and oil prices, may remain high,” Paweł Borys said.

A few months ago, the president of PFR in public speeches and interviews judged that there was no risk of entering a period of stagflation, i.e. the simultaneous occurrence of both significant inflation and economic stagnation because the rebound after the pandemic was very large. Now, however, after the outbreak of the war in Ukraine, the threat of stagflation is no longer being questioned. However, he adds that Poland has a chance to see a significant increase in public investment next year, and this will mitigate the effects of the economic downturn.

According to the president of PFR, the first negative effects of the war in Ukraine and the sanctions imposed on Russia are already felt by Polish exporters to the eastern market.

(PAP)