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Poland’s Economy Amidst Turbulence: Economic Growth to Slow in 2024

ECONOMYPoland's Economy Amidst Turbulence: Economic Growth to Slow in 2024

Economists predict a period of turbulence for our economy in the short term. The budgetary situation remains unclear, with a weakening and low economic growth, and uncertainty about inflation rebound. Despite this, Poland is catching up with advanced economies, like Japan or Germany. According to Krzysztof Piech, a professor at the Łazarski University and author of the “Opening Balance 2023” report, despite the challenging end to 2023, the economic forecasts for Poland in 2024 are generally quite positive.

“The Polish economy has achieved a great position in export over the past years. We have had a long-standing problem with a deficit in foreign trade, but for several years we have been running a surplus” – said Dr. Krzysztof Piech, a professor at the Łazarski University.

Foreign trade turnover for the period from January to October 2023 amounted to 1349.8 billion PLN in exports and 1301.2 billion PLN in imports in current prices. The positive balance amounted to 48.6 billion PLN, compared to a deficit of 78.8 billion PLN in the same period in 2022. Compared to the same period last year, exports increased by 1.2%, and imports fell by 7.9%.

“What’s more, we are particularly good at exporting services, which is a little-known category. Business, IT, and transport services – they all give us one of the highest ranks in the world. We are in the top ten largest service exporters in the world, which is very good for our economy as it means high margins and high earnings for our companies.” – says the economist.

In the last 17 years, Poland has increased services exports more than fivefold (to USD 96 billion). In 2021, Poland ranked third in the EU and seventh in the world in terms of services trade surplus.

“Although we have had very good trends in recent years, unfortunately, the end of 2023 was not the most favourable. Slow economic growth, weakening industrial production growth, and an uncertain budget situation – all of this poses certain threats that the new government and the new finance minister will have to deal with. We do not yet know what will happen to inflation, at what level it will settle.” – warns Dr. Krzysztof Piech.

In the third quarter of 2023, the GDP adjusted for seasonal variation (in constant prices, referring to the year 2015) increased in real terms by 1.5% compared to the previous quarter and was 0.6% higher than a year ago. The non-seasonally adjusted GDP (in constant, previous year average prices) increased in real terms by 0.5% compared to the third quarter of the previous year. In the first half of the year, we even recorded a negative result.

According to the Central Statistical Office (GUS), the price increase of consumer goods and services, that is, inflation, amounted to 6.6% in annual terms in November. This is the least in two years, but more than indicated by the preliminary reading (6.5%). Compared to the previous month, the prices of goods and services increased by 0.7%, the most since April. According to economists of Polish and international banks, next year the Polish economy will grow by 3-4%. Most are raising their forecasts.

“Economic forecasts for Poland for 2024 are generally quite favourable. We will continue the development from previous years, although we may temporarily have difficulties, as the economic growth forecast for 2023 will be one of the lowest in the last 30 years and we are entering 2024 with such an economic growth rate. If the International Monetary Fund’s forecasts for 2024 are confirmed, our economic growth rate will be 130th in the world, so the situation may temporarily be quite disturbing. However, fortunately, Polish entrepreneurs will likely pull our country out of this and lead to faster economic growth.” – says the economist.

According to the author of the “Opening Balance 2023” report, Poland could join the top 20 largest economies in the world in at least 10 years, assuming that sustainable growth is achieved and 1% of global GDP is exceeded.

“Despite all the turbulence we’ve had, like the financial crisis a dozen or so years ago, the pandemic, and the war in Ukraine, we keep catching up with the world’s largest economies, like Germany. What is interesting about our situation is that we might catch up with Japan in 10 years, in terms of affluence per capita. Not necessarily because our economy is so great – Japan has its own problems, but it is positive for our country that the trends characterising our economy are positive and indicate that we will eventually catch up with the European Union.” – predicts Dr. Krzysztof Piech.

In 2022, Poland’s GDP per capita was approximately 80% of the European Union average. Maintaining the current pace of development, we will catch up with the EU average in about 14 years. Catching up with Germany is possible in the mid-21st century, but if we implement growth-enhancing reforms, it will be possible around 2038.

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