Public debt will show a decline: an overview of economic development
The Polish government has forecast economic growth until the end of 2023. According to the document, the public debt should be reduced by 49-50% of GDP. The country’s financial sector deficit will be at 3% of GDP.
According to the Prime Minister of Poland, despite the difficult year of 2022, the Polish economy could continue its growth and ensure the stability of the labor market. The official noted that the country demonstrated a good pace of development, tested by the pandemic, inflation, and geopolitical conflict. In the past, the dynamics of growth of the Polish economy were considered one of the best in the European Union. In 2022, the budget deficit was 2.633 billion euros. This index was lower than analysts forecasted.
The National Bank of Poland published its expectations for the economy in 2023. According to its forecasts, inflation will fall to 11.9% this year. Economic growth will amount to 0.9%, and in 2024 the index will reach 2.1%. Experts believe that in 2025, we should expect growth of 3.1%.The result of implementing measures to curb inflation became noticeable at the end of 2022. However, a more sustainable impact can be seen by the end of the current period. Despite the successes, the effects of inflation will continue to weigh on the Polish economy for some time. This is why its development has slowed down. However, there is no reason to talk about recession. Since 2024 there will be good dynamics of growth.
The main factor behind the slowdown in inflation is the increase in interest rates, which has been observed in Poland and other countries worldwide. Despite the tightening of consumer policy, the revision of interest rates gave the expected result, supported by global changes. For example, there is a drop in commodity prices in the global market, and the supply chain situation is improving.
As for internal factors influencing inflation, it is primarily a slowdown in the economy. However, analysts of the National Bank of Poland note that the decline in growth will be less than they expected in the previous forecast. A noticeable inflation reduction can be observed already in 2024, when its level will be 5.7%. In 2025 it is projected to decline to 3.5%.
The regulator said in March this year that it has no plans to revise interest rates in the near future. The monetary policy gives the desired result, so there is no need to resort to the indicator increase for now. In addition, the Central Bank uses other effective mechanisms to curb inflation.