Economy
23:51 10 January 2021
Post by: WBJ

Polish model of economic growth drives inflation

Polish model of economic growth drives inflation
Source: SnappyGoat

As ING points out, consumption, exports, and public investments will be the key factors in rebounding GDP in 2021. In 2021, households are likely to consume their accumulated savings, as was seen in the data as early as November, when the rate of money deposits is falling after the lifting of trade restrictions.

As economists add, Polish economic growth is also to be supported by a strong labor market and generous social transfers. This is where the problems begin because such a structure of economic growth drives inflation.

Why? More earnings and more money from social programs in our pockets motivate us to spend them – that is, consume them. And the more we buy, the faster the prices rise.

In order for the inflation rate to rise more slowly, we would have to change the structure of growth – that is, make it not based mainly on consumption. ING economists indicate that private investments should increase in Poland first so that our economic growth is of better quality and inflation does not rise too quickly.

Public investment – that is, state and local government – is not enough, because the private investment rate has fallen so much that even a good result of public investment was not able to compensate for this decline. Unfortunately, the private investment rate in Poland has been consistently falling since 2016, and at the end of 2020, it was the lowest in history, so its resurrection will not be easy.

(300gospodarka) https://300gospodarka.pl/news/polski-model-wzrostu-gospodarczego-napedza-inflacje-dlatego-musimy-wyciagnac-inwestycje-z-wieloletniego-dolk


inflation
gdp
ing
pandemic

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