COVID-19 pandemic leads to Poland’s first full-year GDP fall in 25 years

COVID-19 pandemic leads to Poland’s first full-year GDP fall in 25 years
Government anti-crisis measures prevented a bigger fall in 2020.
By Wojciech Kosc in Warsaw February 1, 2021

Poland’s GDP contracted 2.8% in 2020 in the aftermath of the COVID-19 (coronavirus) pandemic, the country’s statistical office GUS said in an initial estimate on January 29.

The decline is the first since 1995 but proved milder than expected in the middle of last year after the first coronavirus lockdown brought the 38-mn economy to a standstill. In the latter half of 2020, the combination of the government’s relief programme, temporary easing of restrictions, and businesses’ adapting to the reality of the pandemic, all resulted in partial recovery.

“While this is a historical decline it is also significantly less compared to first estimates in mid-2020 [of -4.5% to -5.4%. With that in mind, the indicator is definitely not disappointing,” Raiffeisen Bank said in a comment.

All key elements of GDP suffered declines in 2020, GUS data show. Domestic demand declined 3.7% last year overall, compared to a gain of 3.5% in 2019.

Consumption fell 1.5% in 2020 after growing 4.4% in 2019. Household consumption, the longtime driver of growth, declined 3% last year after expanding 4% in 2019.

Investment suffered a drop of 8.4% in the aftermath of the pandemic, a sharp fall after growth of 7.2% in 2019.

“This reflects the ongoing high uncertainty among firms in Poland and is a reason for cautiousness in forecasts of the pace of recovery in the next quarters, especially after the expected spending spree of consumers comes to a halt,” according to Raiffeisen.

“The latter becomes likely as, according to Eurostat data, the savings rate in Poland almost returned to the pre-pandemic level already in Q3, thus reducing the lockdown-induced savings glut,” the Vienna-based bank added.

Other analysts are slightly more optimistic.

“Recent reports point to significant delays to vaccine deliveries and these have further dampened the very near-term economic outlook," said Capital Economics. "Assuming that these issues are resolved in the coming months … we remain confident that large policy support and strong exports will mean that Poland outperforms much of the region in 2021-22."

 
 

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