Poland’s economy shrank by more than any other in the European Union in the fourth quarter of 2022, new Eurostat data show, as stubbornly high inflation limited consumption.
In the last three months of the year, Poland’s seasonally adjusted gross domestic product (GDP) fell by 2.4% compared to the previous quarter, a far steeper drop than the second-worst performer, Estonia, which recorded a 1.6% decline.
Most EU member states saw their economies grow, with the Mediterranean trio of Greece (1.4%), Malta (1.2%) and Cyprus (1.1%) recording the best figures. However, the EU’s economy as a whole shrunk by 0.1% from Q3 to Q4.
Eurostat’s data also show that, in comparison to the fourth quarter of 2021, Poland’s seasonally adjusted GDP grew by 0.4%. That was the sixth lowest figure among EU countries, with the Baltic trio of Estonia (-4.4%), Lithuania (-0.4%) and Sweden (-0.1%) posting the largest declines.
Over that period, Ireland’s economy grew the fastest among European countries, surging by 13.1%, followed by Greece (5.2%) and Romania (4.9%). The EU’s economy as a whole grew by 1.7% year on year.
According to analysts at mBank, Poland’s economy slowed in the second half of 2022 on the back of a decline in consumption, which has usually driven the Polish economy.
Consumption in Q4 of 2022 was down 1.0% year-on-year, which was the largest such drop in at least two decades apart from in 2020 during the height of pandemic lockdown. Last year’s consumption slowdown came despite an influx of Ukrainian refugees has significantly increased the number of consumers.
While consumer spending in 2020 was dampened by the pandemic and lockdowns, this time the collapse in demand is the result of inflation, which has been at a 25-year high of over 16% in recent months, reducing the purchasing power of households.
However, economists note that investment has remained strong in Poland. According to Krystian Jaworski of Credit Agricole Bank Polska, the rise in investment was probably driven by a recovery in public investment at the end of last year, reports the Rzeczpospolita daily.
Poland’s deficit for 2022 came in almost 60% lower than planned in the budget, despite the effects of the pandemic and war in neighbouring Ukraine.
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Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.
