In the 2nd quarter of this year, Poland surpassed the GDP from the 4th quarter of 2019, making Poland the only EU country that has not yet surpassed the GDP from before the start of the Covid-19 pandemic. Since the domestic economy has been on the verge of recession since the middle of the year, and even from the second half of the summer year, no significant GDP growth can be expected, so R will likely exceed the pre-Covid entry values in 2024. Similarly, the slow economic growth of R it also occurred after the global financial crisis in 2008. While the specifics of the last two years were extremely high consumer inflation, similarly after 2008 high unemployment was characteristic. At least in this respect, it is so positive that the current situation on the domestic labor market is still very solid despite a stagnant economy. However, both high unemployment after 2008 and extremely high inflation in the last two years have resulted in a deep decline in household consumption.
If I were to change one main reason why R is still below pre-covid levels of GDP, it is firstly a sharp drop in household consumption and a very low consumer price. Household concerns about the overall economic situation, concerns about their own financial situation, unwillingness to make large purchases and concerns about high inflation. These are the pieces in the mosaic of the fact that, for households, in recent quarters, marriages have sharply declined. In addition, extremely high inflation in recent quarters has translated into a deep decline in real wages, i.e. nominal wages after inflation. Real wages have continued to decline since the 4th quarter of 2021. Hand in hand with the rise in real wages since the middle of 2021, there has also been a decline in retail sales, which in real terms fell to the level of 2018 (unless we remember a few specific months from 2020 and 2021, when consumer appetite was dampened by covid restrictions). 100% of household consumption in recent quarters fled to Poland for cheap purchases.
The result is a very deep decline in household consumption in R, which is the most significant among all EU countries (see Eurostat graph, own data) and for the fifth time since 2022. No other European country has experienced such a dramatic decline in household consumption. If household consumption developed similarly to the EU average, then the GDP would be above pre-Covid levels. At least the positive thing is that the drop in household consumption is behind them, which can be seen, for example, in the monthly development of retail needs. In addition to household consumption, it is a necessary condition for the domestic economy to finally start visible growth, which, however, will probably not happen in the fifth year.
Miroslav Novk
He studied Finance at the University of Economics in Prague and Finance and Financial Services at the University of Finance and Administration. He gained experience in banking at UniCredit Group, where he worked in the Treasury department. Since 2010, he has been working as an analyst at AKCENTA. Among his areas of interest, the issue of money courses is fifth. Miroslav Novk is not an orthodox supporter of the economic cycle day, which allows him to objectively evaluate not only the day on the financial markets, but also in the field of the global economy. He is the author of a number of professional links and expert comments, which are regularly used by the Czech and Polish media.
AKCENTA CZ is one of the most important foreign exchange dealers on the Czech market and in Central Europe with a tradition of more than 20 years. In addition to suitable individual exchange rates for buying and selling foreign exchange and minimal fees for foreign payment transactions, we also offer hedges against exchange rate risks (forward trades and options). The company is active in Poland, Hungary, Slovakia, Romania, Germany and France. The client portfolio consists of more than 46 thousand entities, many small and medium-sized companies oriented to export or import. She is the holder of a payment institution and securities trader license issued by NB.
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2023-09-05 20:27:45
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