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According to data published on Monday by the Central Statistical Office, Polish economy contracted by 1.6% on a year to year basis. The recession is therefore still very visible - a year ago, during the same period, the GDP was growing by 4.4%.  

However, these figures must be compared with reference to the more recent period, that is to say the first six months of 2020. Here, the progress is very clear. Let us recall that in the second quarter of this year, Poland's GDP fell by as much as 8.2%. This was the worst decline in several decades, comparable only to the beginnings of the political transformation, when Poland was essentially bankrupt.  

Meanwhile, now the quarter-on-quarter increase in GDP was as high as 7.7%. This means that the losses from the disastrous second quarter were almost entirely made up for. Not long ago, before the strong impact of the second wave of the pandemic, one could even wonder whether the optimistic forecasts that our economy is to suffer the least from the crisis, should not be revised upwards even more.  

Consumption to the rescue. Again

It is difficult to predict what the consumption patterns will look like after the imposition of strict restrictions in the service sector (closed cinemas, restaurants and shopping malls). In the third quarter of the year, consumption was a salvation for the economy. According to the estimates of M Bank, over this period consumption fell by only 0.4% year-to-year, and at the same time it was as much as 11% higher than in the second, worst quarter for the economy.

Monika Kurtek, chief economist at Bank Pocztowy, sees things similarly. Her estimates of consumption are even more optimistic. In her opinion, it may even slightly increase by 0.8% on an annual basis. In turn, Jakub Rybacki from the Polish Economic Institute points to the role of our industry, which is in relatively good shape. He stresses that according to Eurostat, in September, the industrial sector in Poland achieved an annual growth - and only Portugal can boast a similar success. However, in Poland the pace of growth was higher (3.3%).

The role of de-freezing the economy and gradual opening of new industries were also pointed out by the analysts of Bank Ochrony Środowiska. However, they also mentioned another factor, which is the government’s 'anti-crisis shields'. "Such a positive effect of the reopening of the economy has also been fostered by a significant loosening of fiscal policy, which has improved the liquidity of businesses, limited the scale of the unemployment, decreased the drop in household income and reduced deterioration in consumer moods" - they conclude.

Investments in poor condition, with no help in sight

Yet, there is a serious reason for concern. It is the level of investment. The data of the Central Statistical Office are, for the time being, of a 'rough estimation' nature, so we have to wait a little longer for a comprehensive analysis to be prepared. However, for now experts have no doubt that the data in the third quarter looked dreadful. "The investments experienced probably a deepened decline as they are very much affected by the uncertainty associated with the pandemic," says Kurtek.

And mBank's economists claim that when the second wave of the pandemic is over, it will be again the consumption that will make up for the losses the fastest, while we will have to wait a long time for investments to return to pre-crisis levels.

It should be recalled that before the pandemic, Poland’s level of investment was already low compared with the European Union. It was also very different from the assumptions of the so-called Morawiecki plan. In the second quarter, the fall in investment amounted to almost 11%. There is no reason to believe that in the third quarter, these losses have been made up for, as the economic uncertainty caused by the crisis has not diminished.

However, on the basis of today's data, it is safe to say that if it were not for the autumn wave of infections, our economic losses in 2020 would be minimal. BOŚ economists have no doubt that "unfortunately, the positive trends seen at the end of the second and third quarter will not continue in the fourth quarter.“ It is due to already mentioned restrictions on trade, culture, entertainment, catering and tourism. They will be costly, but the experts give some hope. In their opinion, the fall will be large but not as dramatic as it was in the second quarter.

Other EU countries fall even further behind 

So what can we expect? BOŚ experts believe that in the fourth quarter our GDP will fall by 5% year to year. Jakub Rybacki of PIE believes that the decrease will be about 4%, and mBank analysts also say that the decline will not be as high as in the second quarter. In total, Polish GDP is expected to contract by between 3.5% and 5% in 2020.

It is also worth saying that in the third quarter, the Polish economy slowed down the least in the entire EU. The infamous record is once again held by Spain. Its economy, which is largely based on tourism, suffered a very severe decline in the second quarter - it shrank by as much as one fifth. Now, after the seasonal adjustment, the decline was equal to 8.7%.


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