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Inflation in 2023 – EC economic forecasts for Poland. European Commission estimates

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The European Commission has lowered its estimates for HICP inflation in Poland in 2023 from 13.8 percent to 11.7 percent, according to the winter forecast round. Despite this, according to the EC’s forecasts, Poland will be ranked second in the European Union in terms of inflation – only Hungary is to be higher.

In the latest forecasting round, EC economists lowered their forecasts for HICP inflation in Poland in 2023 to 11.7%. from 13.8 percent forecast in November 2022 and in 2024 to 4.4 percent. from 4.9 percent

Inflation in Poland in 2023 – EC forecasts

“HICP inflation consistently surprised positively in 2022 due to the increase in commodity prices, rising production costs and demand pressure, which allowed companies to pass on the costs to consumers. In the following months, despite measures introduced by the government to limit the increase in gas and electricity prices , inflation is expected energy prices will remain elevated due to the gradual extinction tax credits for energy products in January 2023.

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While core inflation is likely to be driven by strong wage growth and an expansionary fiscal stance, falling wholesale energy prices and some easing in the labor market should gradually dampen inflationary pressures, especially towards the end of the forecast horizon. After peaking at almost 17.0% in 2023, HICP inflation will fall to 4.2% in the last quarter of 2024. Overall, HICP inflation will be 11.7% in 2023 and 4.4% in 2024. ” – added.

According to the chart published on Twitter by PKO BP analysts, the highest inflation in the EU in 2023 is to be, according to EC forecasts, in Hungary, where it is to amount to 16.4 percent. Poland ranked second – 11.7 percent, Romania – 9.7 percent – fourth, Slovakia – 9.7 percent, and the Czech Republic – 9.3 percent – fifth.

In turn, the lowest inflation in the EU is to be recorded in 2023 in Luxembourg – 3.1 percent, Cyprus – 4.0 percent. and Finland – 4.2 percent.

Polish economy – EC forecasts growth

“In the coming quarters, elevated inflation and low consumer and business confidence will continue to weigh on economic growth. Declining real incomes, coupled with an already low saving rate, will put pressure on private consumption, which is forecast to decline slightly in 2023. Private investment, especially in construction, will continue to be influenced by higher interest rates and increased uncertainty. Nevertheless, the significant inflow of foreign direct investment and the expected increase in public spending (especially on defence) will more than offset weaker private investment, thanks to which the growth of total investment over the forecast period will be positive.

“For foreign trade, the easing of supply bottlenecks will support export growth. Coupled with the weak import outlook, net exports are projected to contribute positively to growth in 2023 and 2024 (albeit to a lesser extent). Overall, after slowing to 0.4% in 2023, GDP growth is expected to return to 2.5% in 2024 as inflation weakens and global economic growth accelerates.

European Commission lowered its growth forecast Poland’s GDP in 2023 to 0.4 percent. from 0.7 percent estimated last fall. In November 2022, the European Commission forecast that Poland’s GDP would grow by 0.7% in 2023 and by 2.6% in 2024.

Read also: Brussels announced new forecasts for the Polish economy >>>

HICP indicator

The HICP is the harmonized index of consumer prices, calculated according to the unified methodology of the Statistical Office of the European Union. According to the inflation criterion contained in the Maastricht Treaty, the HICP is the basis for assessing price stability.

Data for HICP inflation come from household budget expenditures and national accounts, and data for CPI only from household budget expenditures.

Main photo source: Grand Warsaw / Shutterstock.com

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