The Polish Central Statistical Office will today release the country’s second quarter GDP growth figures, which are expected to confirm a contraction of 9%. The sharpest decline since the early 1990s, today’s figures will officially place Poland in recession.
In April, Warsaw unveiled a record $66 billion stimulus package with significant short-term support for small businesses to avoid a spike in job losses. As a result, Poland’s unemployment has remained comparatively mild—peaking at 6.1% in June—allowing consumer spending to recover. Retail sales, led by costlier durable goods like furniture and household appliances, increased 2.7% year-on-year in July, the first monthly growth since February.
Preliminary assessments forecast an expansion in the third quarter, backed by encouraging economic indicators and the government’s pledge to avoid a nationwide lockdown, even as COVID-19 cases have risen throughout August. Renewed restrictions in hotspot cities like Katowice and Warsaw, as well as a recent ban on flights from 46 countries, suggest that Poland’s recovery may not be as smooth as expected. A continued resurgence could force lengthened social distancing restrictions in major cities and extend Poland’s recession into the third quarter. A delayed recovery for small businesses and firms in heavily afflicted sectors, such as the automobile industry, would likely force the government to extend stimulus benefits, further widening the country’s 2020 budget deficit.
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William analyses global economic and political events for the Current Developments Team, focusing his research on Europe and the Middle East. He contributes regularly to the Daily Brief