GDP growth rate in 2021 may exceed 5% y/y due to higher economic activity recorded in Q1, according to PZU chief economist Pawel Durjasz.

“The GDP level before the pandemic is likely to be exceeded already in Q2 (only 1.7% is missing). This is because we expect a strong rebound in deferred consumption as restrictions on services is lifted. Even if investments don’t pick up again in the coming quarters, its growth in 2021 could be in double digits, raising the existing domestic demand forecast. In view of better-than-expected Q1 results and a surprisingly early rebound in investment, it is likely that GDP will grow by over 5% in 2021, unless this additional demand flows more clearly abroad, increasing imports and the negative impact of net exports on GDP,” the chief economist’s monthly comment reads.

The institution forecasts that the expiration of the “anti-crisis shields” will not have a significant negative impact on the labor market, and the expected rebound in consumer demand will not be threatened.

According to the economist, May inflation will record the highest level this year, and the average annual inflation can reach about 4%.

“For the time being, factors beyond the MPC’s control (mainly the increase in global prices of fuel and other raw materials) are behind the rise in inflation. The Council will probably wait with its reaction to see whether next spring’s base effects will indeed pull inflation back into the area of permissible deviations from the target,” Durjasz wrote in his comment.

According to PZU’s chief economist, “the probability that interest rates will start normalizing around mid-2022 - or perhaps slightly earlier - has clearly increased,” however.

(inwestycje.pl)