Poland’s economic growth ‘will gradually decline’: central bank forecast

Eclipse in 2017 over Katowice mining museum. Photo: Andrzej Grygiel/ PAP

Poland to grow at 4.8 percent in 2018 and 3.6 percent in 2019, while inflation is could be as high as 3.2 percent, according to the National Bank of Poland (NBP) November Inflation Report, published on Tuesday.

The central bank upped its economic growth outlook for 2018 and 2019 on the back of more favourable than expected figures for the third quarter of 2018 .In 2018 Q3 the continued high GDP growth “was accompanied by further improvement in the labour market situation, including a rise in employment and the maintenance of high wage growth.” The inflation report reads.

However, going into 2019 and beyond, economic growth will be restricted by the growth in energy prices and the slowdown in GDP growth in the euro area.

The NBP sees consumer price inflation over the projected horizon rising to the level of 3.2 percent in 2019 and 2.9 percent in 2020, assuming, that the bank’s rate setting body, the Monetary Policy Council, keeps true to its current strategy of not raising interest rates from the current level of 1.5 percent.

While inflation has been at 2.0 percent and below for the past five months, the bank sees prices rising as a result of “growing cost and demand pressure in the Polish economy.”

As regards the global picture, the report’s authors believe that the Euro area’s recovery from the financial crisis ‘’reached its peak in 2017 and in the coming years its scale will gradually decline”, with trading disputes a contributory factor in weakening the economy. The NBP inflation report gives ranges for its forecasts and a 50-percent probability of their accuracy, based on the information they have on hand. In our article we have used the mid points of the forecast ranges.

In other macroeconomic news, with an impact on inflation, average wages in the corporate sector in the third quarter rose to 4580 PLN (EUR 1065) from PLN 4521 (EUR 1052).