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2022/03/14 / Erste Group Research

Downward revision of growth forecast amid Russian aggression

The Polish economy has fully recovered from the pandemic crisis, as the economy expanded by 5.8% in 2021. However, the Russian invasion of Ukraine and subsequent introduction of far-reaching economic sanctions on Russia and Belarus, changed the course of events.

Given Poland’s trade links with Russia, Ukraine and Belarus, as well as increased uncertainty and surging inflation, we revised our FY22 growth forecast down to 3.6%. The Polish economy will still benefit from strong momentum at the start of the year, while increased fiscal spending amid the massive inflow of refugees might be growth positive in the quarters to come. Nevertheless, the outlook remains highly uncertain.

The start of the war in Ukraine fueled the already existing supply-side pressures and double-digit inflation seems inevitable. The demand-side factors remain pro-inflationary as well, given the loose fiscal policy and tight labor market. We expect the government to prolong the anti-inflation measures until the end of 2023. Nevertheless, we see inflation on average at 9.7% this year, with a peak above the 11% mark in 3Q22. Thus, the National Bank of Poland will sustain its hawkish stance and will continue raising rates in the coming months. We see the peak of the cycle, at 4.75%, being reached by July 2022.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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