Meanwhile, investment may pick up in the second half of the year, the bank predicted.
Its team of economists outlined their forecasts for the coming year in the latest issue of the bank’s Economic Quarterly, Polish state news agency PAP reported.
Polish economy expected to slow in 2023
Poland’s economy is set to slow to “near-recession levels,” largely due to adverse external circumstances, notably the continued effects of the COVID-19 pandemic, the war in Ukraine and the energy crisis, according to PKO BP’s chief economist, Piotr Bujak.
Meanwhile, falling real incomes and dwindling demand for loans are expected to suppress private consumption, the economists said.
“It’s a worrying trend going forward, because in recent years, the daily purchases of millions of Poles have been the driving force behind the economy,” Bujak said.
On the positive side, employment is likely to remain stable, as some 30-40 percent of Polish firms still suffer from staff shortages, according to PKO BP’s chief analyst, Marta Petka-Zagajewska.
Thus layoffs are unlikely despite the slowdown; employers are expected to “maintain current workforce levels,” while at the same time “curbing salary increases and other expenditures,” Petka-Zagajewska said.
Inflation to fall to single digits by end of 2023
Petka-Zagajewska predicted that “after the price shocks of 2022, inflation will be falling in 2023, but it will be a marathon, rather than a sprint.”
She added that inflation would likely peak in January or February before decelerating gradually for the remainder of the year.
“By the end of the year, inflation will fall to single-digit levels,” Petka-Zagajewska said.
Meanwhile, the period of monetary tightening is expected to end, with the central bank (NBP) “likely to begin cutting interest rates, starting in late 2023,” according to PKO BP’s Bujak.
Investment to rebound in second half of 2023?
The economic slowdown is bound to put a brake on investment, PKO BP’s analysts said.
However, a strong rebound may begin halfway through 2023, they added.
This will happen if the European Union unblocks EUR 23.9 billion in grants and EUR 11.5 billion in loans for Warsaw from the bloc’s pandemic relief fund under Poland's National Recovery Plan, and if the country continues to expand its armed forces, according to PKO BP's Kamil Pastor.
(pm/gs)
Source: PAP, salon24.pl, pkobp.pl