High public spending related to the unusually extensive flooding in the south and west of Poland is forcing the government to previously mentioned deficit correction in the public finance sector in the current year and in 2025, presumably to approximately 6% of GDP in both years. As a result, the risk of exceeding the constitutional limit of 60% of GDP by the ratio of public debt to GDP – calculated according to the Eurostat methodology – is increasing in 2025. The Monetary Policy Council’s inclination to lower the reference interest rate in the upcoming months is also decreasing, despite cuts in interest rates by the European Central Bank and the US Federal Reserve.
Despite an increase in inflows from the EU under the KFO, we had a negative balance in the current account of more than 1.4 billion euros in July this year, caused by a significant increase in imports, by 10.5% year on year.
The new law for businesses and self-employed individuals reduces the burden for approximately 1.7 million entrepreneurs by about 1300-1400 per month. In August, there was also a continuation of the rapid wage growth in SP (public enterprise sector), at a rate of 11.1% year on year. As a result, private consumption will increase by 2.2% year on year in 2024.
Stanisław Gomułka, Chief Economist BCC
Source: https://ceo.com.pl/duze-wydatki-publiczne-po-powodzi-zmuszaja-rzad-do-korekty-deficytu-i-ryzyka-przekroczenia-limitow-dlugu-84639
