Poland | Quantifying the costs of a prolonged clash with the EU

The recent escalation of the conflict between Poland and the European Union has significantly increased the odds of a decisive response from the EU. The EU’s most powerful bargaining chip are the NGEU and structural funds of which a total of around €110bn (22% of GDP) was allocated to Poland over the 2021-2027 period.

What you will learn:

  • In the downside scenario, government investment in 2022-2023 is over 20% lower compared to our baseline forecast, even after new domestic funding is taken into consideration.
  • The PLN depreciates by over 12% against USD in H1 2022, pushing inflation up from already elevated levels.
  • The upside scenario assumes that the conflict is soon resolved. However, as we continue to assume in the baseline that NGEU funds will flow from mid next year, the positive impact is relatively limited, boosting GDP growth by 0.3ppts to 5.0% y/y in 2022.
Polish RB promo - October 2021

 

Topics: Scenarios, Forecasts, Europe, Eurozone, Economic uncertainty, Risk assessment, Fiscal stimulus, Coronavirus, GDP, Recovery, Exchange rates, Fiscal policy, Covid19, Government, Economic recovery, Outlook, CEE, Poland, CPI inflation

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