Poland’s GDP expanded 4.9% in 2022 (chart), a year marred by war just outside Poland's borders, the country’s statistical office GUS said on January 30.

Given the circumstances, growth eased relatively little compared to an expansion of 6.8% in 2021, the year of the post-pandemic economic rebound. The economic performance in 2022 was very uneven and the negative trends that came to the fore in the second half will continue in 2023, analysts say.

The economy is expected to grow below 1% in 2023, as “high inflation exceeding nominal wage growth, as well as restrictive monetary policy, will radically reduce domestic demand, especially private consumption,” according to Bank Millennium.

That said, upside risks are growing that could fetch a surprisingly fast and strong recovery in 2023, PKO BP said, pointing to “surprisingly strong investment demand and external demand.”

Indeed investment grew 4.6% in 2022 compared to an expansion of just 2.1% the preceding year, GUS said. 

In the fourth quarter alone, investment growth picked up to around 5% y/y from 2% y/y in Q3, according to analysts’ estimates (a detailed breakdown of GDP drivers in 2022 will be published later).

Elsewhere, domestic demand weakened growth to 5.5% in 2022, compared to an expansion of 8.4% in 2021.

Household consumption also faltered, growing just 3% last year versus a gain of 6.3% in 2021. In Q4, households fared much worse, as consumption fell 1.9% y/y, easing further after an already feeble growth of 0.9% y/y in the third quarter.

Overall, “Poland’s economy seems to be holding up much better than in Hungary and Czechia, which we think suffered recessions over the second half of last year,” Capital Economics said.

“Even so, the impact of high inflation, the lagged impact of past monetary tightening and subdued global demand are still likely to act as headwinds to growth in the near term,” the London-based consultancy added.

The slowdown in 2023 means that the National Bank of Poland is unlikely to change its monetary policy, as weak domestic demand will drive a gradual easing of price growth to low double-digits by December.