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Poland GDP January 2022

Poland: Economy rebounds sharply in 2021; growth at 14-year high

The economy expanded 5.7% in 2021, according to an early estimate released by Poland’s Statistical Institute (GUS), slightly above market expectations. The print contrasted 2020’s 2.5% contraction and marked the fastest growth rate since 2007.

The strong rebound reflected a favorable base effect, but also the easing of inhibiting Covid-19 restrictions that had weighed on the economy in 2020. As such, private consumption grew 6.2% in the year (2020: -3.0%), while fixed investment increased 8.0% in 2021, contrasting the previous year’s 9.0% slump.

Commenting on the print, Rafal Benecki, chief Poland economist at ING, noted:

“In short, the consumption boom continues, but investment recovery keeps surprising to the upside. Overall GDP in Q4 2021 presents a strong starting point for 2022 and a good chance for the continuation of the second-round effects on inflation—that companies can easily pass the rising costs to retail prices.”

Regarding the impact on interest rates, Malgorzata Krzywicka, analyst at Erste Bank, commented:

“[The 2021 GDP] figure proved that the economy is running at a full-speed and further tightening of monetary conditions will be required in order to avoid the overheating of the economy. We expect the National Bank of Poland to raise the key rate once again by 50bp to 2.75% at [8 February’s] meeting. Further steps of the MPC remain uncertain and will depend on short-term inflation development. We expect rates to peak at 4.0% by the end of 2022.”

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