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Poland’s economy is racing toward Dragflation: Sinking economy and rising inflation.
Its economy shrank 2.3 percent in this year’s second quarter, which also signals fears of a regional recession later this year. And on the inflation side, it hit a 25-year high at 15.6 percent… while consumer confidence has sunk to its lowest level since the early days of the COVID War.
Poland is Eastern Europe’s largest economy.
“We see it as a first step into recession,” Katarzyna Rzentarzewska, Erste Bank Group’s chief analyst for central and eastern Europe, told the Financial Times.
Poland’s negative second quarter “is a massive surprise to the downside,” she said. “It wiped out expansion from the beginning of the year.”
Facing unchecked inflation and a slowing economy, the country’s central bank could raise its key interest rate by another half-point this year, BNP Paribas economist Martin Kujawski said to the FT.
“Inflation and rising interest rates at the same time will eat into domestic demand,” David Nemeth, an economic analyst for financial firm KBC commented to the FT.
“A marked slowdown is definitely coming and recession is likely as well,” he warned.
Due significantly to the effects of the Ukraine war and western sanctions, some analysts have foreseen a recession for the country, beginning late this year or early next.
TREND FORECAST: Unreported by the FT is the fact that Poland is playing a seriously dangerous role in its support of neighboring Ukraine, the sending of military equipment to Ukraine to fight the Russians and the socioeconomic impact it is having on the Polish nation… including a refugee crisis.
Therefore, the nation will not only steadily slide into Dragflation which is declining economic growth and rising inflation, as economic conditions further deteriorate there will be growing anti-immigration populist movements.