Forecasts are always subject to the risk of uncertainty and in the present conditions they are particularly reminiscent of fortune-telling from tea leaves. Economists are divided into two camps. Optimists claim that the global economy, and therefore also the Polish economy, has probably entered a path of growth. The pessimists point to a number of challenges. Only the coronavirus is certain, which is why it will determine which economic scenarios play out in 2022.
What about Poland?
“When the next calendar year comes to an end, the traditional game of pretending begins, who will best predict the events of the next 12 months. For 2022, however, I’m not sure it’s worth pretending at all. I don’t recall a time when so many big question marks hung over so many key economic issues,” this is how the current uncertainty is defined by one of Goldman Sachs’ former executives and UK Treasury Minister Jim O’Neill.
Considering COVID-19 as the basis for all simulations, O’Neill lists the cause and effect relationship between inflation and economic growth as the second key factor. He gives a short and, as he himself says, useless answer to all questions: “I don’t know,” he says.
When it comes to the Polish economy, the economists of PKO BP see the future in a similar tone. Their report on the development of events was titled “In the dark.” Why? Because they believe this year’s uncertainty will be greater than in the past two pandemic years. In the opinion of PKO BP, the Polish economy has faced more challenges than even during the economic transformation of the 1990s. Of course, pandemic risks, which remain the biggest source of uncertainty, rank first. If in 2021 waves of COVID-19 slowed down growth of the Polish economy to a lesser extent, it is uncertain whether the same will be the case in 2022. It is true that most economists assume a repeat of last year’s scenario, but it cannot be ruled out that the omicron mutation and other variants of the coronavirus will not take us to the situation in March 2020. So we are threatened with overloading the health service, restoring far-reaching restrictions and ultimately a lockdown that will paralyze the economy.
In such circumstances, inflation is just as much of a mystery, and it is perhaps hotting sectors of the real economy hardest. But not only, because its level determines monetary and fiscal policy, and thus consumer demand shaped by price increases. At this point, we are entering an even more unpredictable area, because the helmsmen of our economy have a limited influence on it. It is about the prices of energy commodities which, according to PKO BP economists, will determine the level of inflation the most.
The only available defense instrument is protective measures under the inflationary shield. And when it comes to the facts about which O’Neill spoke with disarming frankness, most Polish experts are inclined to the view that in 2022 inflation will accelerate to well over 8.0%, which means the probability of several years of high price growth. Analysts at ING Bank Śląski are of such an opinion and claim Poland will be particularly threatened by this. Unlike in the euro-zone, it is easier for Polish firms to pass on high costs to consumers via prices. Therefore, in reaction, the National Bank of Poland, based on the recommendations of the Monetary Policy Council, will continue to raise interest rates. Forecasts hover around a reference rate of 3%. They do not rule out more aggressive hikes, obviously triggered by increases in energy and gas prices at the beginning of this year.
The macroeconomic forecasts are more optimistic. According to the OECD, in 2022 the growth dynamics of the global economy will decrease from 5.6% to 4.5%, but it will still remain twice as high as the average pace of the last decade. At the same time, the Polish economy will grow faster than the Chinese one.
The OECD’s December forecast predicts that Polish GDP will increase by approx. 5.2%, which corresponds exactly to the estimates of the European Commission. We will therefore not only develop faster than China (5.1%), but also the UK (4.7%), the euro-zone (4.5%) and the US (3.7%).
The BNP Paribas BP report indicates that economic growth in 2022, fuelled so far by consumer demand in the domestic market, may be limited by supply difficulties and a hole in the labour market. The report shows that real household consumption will increase by 5%. This could have been higher, but unfortunately Poland, like other European countries, will be exposed to shortages of materials and raw materials.
The situation on the labor market is both good and bad news. Economists expected the pandemic to trigger a massive spike in unemployment. Meanwhile, this year’s economic rebound had the opposite effect, i.e. a shortage of labor. Therefore, while enjoying good, albeit bumpy, prospects for the economy, it is worth getting acquainted with the global framework for action.
“The world left 2021 in a state of even greater uncertainty than it had been 12 months earlier. Only one thing is obvious, namely that the coronavirus will dominate the global economy and financial markets in the new year,” according to the conclusion of report by international financial institutions JP Morgan Research, Fitch Group, Goldman Sachs and ING.
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