MACROscope

The global economy has entered the crisis we have never seen before. The shock not only affects both the supply and the demand sides but also virtually all economies in the world at once. The magnitude of the shock depends a lot on the persistence of the Covid-19 disease, which is very hard to predict. We have prepared different scenarios of economic growth in Poland. The one that we think is currently the baseline, assumes that economic activity in Poland is severely supressed until early June and then revives quite vigorously (V-shaped rebound). In this scenario, GDP contracts almost 1% in 2020, to rebound almost 5% in 2021. However, if for any reasons the re-opening of the economy is delayed, we may move to the alternative scenario, assuming more lengthy recovery, with -2.5% GDP drop in 2020, followed by 2.2% rise in 2021. Both variants should be approached with caution, as the uncertainty regarding the evolution of the disease and its consequences remains unprecedented.

The hopes for global economic revival need to be put off for now as the coronavirus keeps spreading and governments try to coordinate action aimed at bringing the situation back under control. The market mood may improve sooner than the growth actually picks up if more policymakers follow the Fed that cut interest rates by 50bp at the unscheduled meeting.

In late February, the stat office released detailed 4Q19 GDP data that made us revise our 2020 GDP growth profile. Overall, the headline for 2020 has not changed significantly (3%) but the quarterly path now looks more upside running instead of roughly flat 3% in each consecutive quarter. In our opinion, any attempts to assess the total impact of COVID-2019 on the economic activity bear a significant error, but this is clear that the risk to our Poland GDP growth forecasts is tilted to the downside, even after the revision of growth in 1H20.
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