Poland’s GDP to plummet by 2% in 2020, rise by 4.8% next year: S&P
21:33
The coronavirus pandemic is expected to pummel Poland’s GDP by 2 percent in 2020, according to S&P Global, a Manhattan-based multinational financial information and analytics corporation. The GDP is expected to rebound by 4.8 percent next year. In the years 2022-2023, Poland's GDP will grow by 2.7 percent and 2.5 percent, respectively.
Due to the pandemic, S&P is expecting a global recession this year, with a GDP decline of 0.4% in the eurozone and 2 percent in the UK.
“This alone makes Poland’s prospects for 2020 a challenge. In addition to the difficult external environment, domestic demand will also seriously suffer from measures adopted by the government to stop Covid-19 [the disease caused by the coronavirus]. Although Poland has recorded a relatively low number of confirmed cases, the authorities are tightening restrictions on interpersonal contacts. The country is covered by almost complete lockdown, and almost all economic activity – except for matters necessary for everyday life – has been limited or suspended,” the press release states.
“As a result, we have lowered our growth forecasts and now we expect that Poland’s GDP will shrink by at least 2 percent with decreasing exports, consumption and investments. This will be the first year of the year-long GDP decline since 1992.”
The global rating agency emphasized that “rapidly changing environments” make forecasting more difficult. Uncertainty concerns the pace and scale of coronavirus spread, as well as the effectiveness of prevention in the country abroad.
S&P also pointed out that they expect the Polish economy will quickly cope with the coronavirus shock.
S&P forecast that the unemployment rate in Poland will increase this year to 8 percent as compared to 3.3 percent last year, while in 2021-2023 it will be at 5 percent, 4.5 percent and 4.5 percent, respectively.
S&P Global expects the government sector and local government (the so-called general government) deficit to worsen in Poland to 6.1 percent of GDP this year from 0.7 percent of GDP last year, and then improvement to 3.1 percent of GDP in the following year. According to the agency, this sector’s debt will reach 54.1 percent in relation to GDP (compared to 47.1 percent last year and 53.6 percent expected in 2021).
The agency underscored that as part of the fight against the effects of the coronavirus pandemic, the Polish government has introduced an anti-crisis shield worth around 10 percent of GDP. It estimates that direct expenditure on the side within public finances will equal approximately 3 percent of GDP.
“These expenses, along with lower income, largely due to the temporary deferment of payments for companies affected by the pandemic and the likely shortfall in previously budgeted revenues (such as the transformation fee in the pension reform and funds from the planned 5G license auction) will increase government deficits in 2020 to at least 6 percent of GDP,” the statement adds.
