- Although today’s data from the Central Statistical Office will confirm a fairly high economic growth, economists’ forecasts on what scale it will take differ significantly. The reason is, among others a mysterious propensity for enterprises to continue hoarding inventory
- However, experts agree that this is the last such good data in the near future. A very likely scenario is a technical recession, ie contracting GDP for two consecutive quarters
- The downturn in industry and the worrying data from the world economy have a negative impact
- Economic growth forecasts in 2023 are getting worse. The European Commission and the S&P agency have already lowered their estimates for Poland. Despite this, we should still end in 2023 in positive territory
- You can find more such information on the Onet homepage
The average of economists’ forecasts suggests that the Central Statistical Office will today announce economic growth of up to 6%. GDP in Q2 compared to last year. However, the uncertainty is huge, as evidenced by the large “split” of individual forecasts – from 5.2 to 7.4 percent. the expected growth.
If the growth actually amounted to 6%, it should normally be optimistic and testify to a significant acceleration of the economy. – Taking into account all the turmoil in the world, an increase on this scale is still a very good result, which previously most analysts would have taken in the dark – comments Piotr Soroczyński, chief economist of the Polish Chamber of Commerce.
However, the situation is more complicated. While the data will still be good, the future is rather worrying for experts. Why? You can be sure that it will only get worse. The current GDP data will not be better than those from the last quarter, when the growth reached 8.5%.
It will be slower
The slowdown that awaits us is underlined even by those whose forecasts are higher than average forecasts. Santander’s experts indicate that the Central Statistical Office may exceed expectations and inform by up to 7 percent. GDP growth. And yet, in their opinion, they are far from optimistic.
“Our forecast still looks” good “in terms of annual dynamics, but yes it really means a marked slowdown in economic activity – seasonally adjusted dynamics quarter to quarter close to zero (or a bit below), compared to +2.5 percent. q / q in Q1 2022 “- they describe.
A result worse than the previous quarter would mean that we are one step away from a technical recession – indicated when GDP has been deteriorating for two consecutive quarters. A significant number of economists believe that Polish results in relation to the quarter to quarter will not improve quickly. And this means that we can be here now (because it is in the third quarter) in a technical recession. This was indicated, among others, by Bank Millennium analysts or ING Bank Śląski.
– In fact, the technical recession in quarterly terms seems inevitable, especially as in Q3 and Q4, year-on-year growth may amount to approx. 2%. GDP. However, it must be remembered that this is largely a seasonal effect. It was only in May 2021 that we lifted most of the restrictions, so the results of the first quarter are also due to the low base effect – says Piotr Soroczyński.
– In the case of Poland, the data in the quarterly comparison may turn out to be misleading, because as a still developing economy we are subject to strong fluctuations resulting, inter alia, from from energy consumption or agricultural production. Therefore, I would attach less importance to the phenomenon of a technical recession than to the richer economies in the West – he adds.
What is Pulling Down?
The preliminary publication of the CSO will not show the exact structure of economic growth yet – this data will be available at the end of the month. The biggest mystery to analysts is how inventories will affect GDP. Some of them expect that they will continue to play a significant role in growth, others that their role will decline now.
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“Our estimate of GDP growth in Q2 2022 (7.4% y / y) is clearly above the consensus, with high uncertainty both on the side of factors that may work in plus (contribution of inventories) and in minus ( eg added value in financial services) “- describe PKO BP economists.
However, the role of inventories may decline. “We are still assuming a large contribution from inventories (although this category is slowly coming down),” mBank experts say.
– New orders and inventory building are among the main engines of growth in Q1. As a rule, we are happy when orders increase by 15%, and here we dealt with as much as 50%. leap. What’s next? This, however, is a mystery. It seems obvious that orders and stocks cannot grow with such dynamics anymore. Nevertheless, entrepreneurs can still buy raw materials in advance, taking into account shocks in the winter. This will most likely weaken at the end of the year, says Piotr Soroczyński.
Consumption and industry
There may also be a decline in consumption. – Some refugees left, and at the beginning of the war they had a positive impact on the demand for products. On the other hand, there are factors that we have not considered important so far. This includes the development of the arms industry or larger stocks prepared by households – notes Piotr Soroczyński.
Growth in the coming quarters will be weaker. PKO BP confirms that one must take into account a further slowdown in industrial production (6.5% y / y) while maintaining high production inflation (25.7% y / y). This is evidenced by the deteriorating PMI index – in July, the economic situation in industry was the worst since May 2020., when the economy was unlocked after the first pandemic lockdown.
The tendency to weaken growth will also carry over to the next year. As PKO BP assumes, this year it will amount to 4.9 percent. In 2023, however, it will be about 1.3 percent.
The S&P agency assumes a slightly more optimistic scenario. However, its forecast for Polish GDP for next year is getting worse – in July it lowered it to 2.1 percent. from 3.1% projected in early April. The European Commission, on the other hand, raised its forecast in July Poland’s GDP growth in 2022 from 3.7% to 5.2%, but in estimates for 2023 lowered expectations from 3 percent up to 1.5 percent
Fears and expectations in the world economic situation
Recent months have proved that many predictions can quickly become outdated. The fate of Polish GDP will be largely dictated by what is happening in the world. A technical recession in the USA or very poor economic situation in Germany make you face trouble.
– What we should fear most is a global restriction of the flow of goods, which would undoubtedly hit Poland as well. Possible shortages in energy supplies may also be a problem – assesses Piotr Soroczyński.
As a consolation, the chief economist of the Polish Chamber of Commerce adds that the slowdown in the German economy, which is our largest partner, does not have to translate into an automatic decline in the indicators of the Polish economy.
– In the past, the economic situation in Poland and Germany was similar. However, there have been significant differences over the past few years. This can be explained by the fact that large international concerns redirect some of their operations to Polish branches. This thesis is confirmed by the fact that in the first half of the year, Polish exports to Germany increased by 14.2 percent, and yet the local economic situation remains weak – says the economist.
Author: Grzegorz Kowalczyk, journalist at Business Insider Polska