War in Ukraine Will Lead To Recession in Poland
Apr 22, 2022
According to a report by the Polish Economic Research Institute (Polski Instytut Ekonomiczny), the Russian-Ukrainian conflict has created a humanitarian crisis and long-term economic consequences. It is currently difficult to estimate the consequences of the war in Ukraine. War losses were known to be enormous and had lasting effects on many European countries.
Analysts at the Polish Institute of Economic Research emphasized that Ukraine's economy is in a deep recession. The fighting is currently taking place in an area that produces 55% of Ukraine's GDP. The United Nations estimates that Ukraine's GDP loss could reach $100 billion this year. The International Monetary Fund predicts that 35% of Ukraine's GDP will be destroyed. In addition, the scale of damage to Ukraine's infrastructure was severe. Currently international institutions and the EU should formulate a plan for the reconstruction of Ukraine's economy. "Most European countries, including Poland, will suffer economic consequences," said Piotr Arak, director of the Polish Institute of Economic Research.
Trade credit risk information such as energy market turmoil and long-term food price increases”. Average inflation in Poland this year is 10.8%. International trade will change significantly. Poland will have to displace metal suppliers. In 2021, nearly 10% of Polish steel imports will come from Ukraine, Russia and Belarus also account for 10% of Polish steel imports. In addition, Ukraine is an important supplier to Poland of vegetable oils, semi-finished products for the production of feed, honey and semi-finished wood products. Deliveries from Eastern Europe will be difficult to replace. However, Poland's food supply is safe. It is worth noting that Poland is self-sufficient in the production of grains, dairy products and meat. Jakub Rybacki, an analyst at the Polish Economic Research Institute, pointed out that due to the war in Ukraine, Poland needs to provide assistance to Ukrainian refugees, At present, society requires the government to increase military spending. High inflation has led to the increase in interest rates by the National Bank of Poland. These factors have led to the deterioration of the structure of Poland's national debt. Although Poland did not participate in the Ukrainian war, the consequences of the war will have a long-lasting impact on the Polish economy.
According to Poland's PKO BP Bank The escalating war in Ukraine, a ban on Russian energy imports and a recession in Germany could trigger a recession in Poland. However, some factors could still boost the Polish economy in 2022. Piotr Bujak, an economist at PKO BP Bank in Poland, said: “If Economic growth will remain on a downward trend in the next two quarters, and the Polish economy will experience a recession but not collapse. Economic growth was relatively low in the second and third quarters due to lower investment rates, the impact of the Ukraine war on the European economy and supply chain disruptions in China. However, despite the economic slowdown, GDP growth has been stable this year”. The Polish economy will maintain a stable development trend this year, despite the fall in growth in the second and third quarter of the Polish economy due to the war in Ukraine. PKO BP Bank forecasts Polish GDP growth rate in 2022 3.5% to 3.9%.
