Polish Economy to Decelerate Sharply, Investments Needed to Strengthen Health Systems and Protect the Most Vulnerable
The Polish economy, on the upswing in recent years, is going to experience an abrupt slowdown caused by the COVID-19 (coronavirus) pandemic, affecting mainly the least resilient businesses and labor force. These circumstances call for substantial investments in healthcare and social safety nets, and for swift support to be made available to enterprises without excessive administrative burdens, says a new World Bank report on the impact of the pandemic on developing economies in Europe and Central Asia, published on Thursday.
Considering the uncertainty around the future development of the pandemic curve, any macroeconomic projections formulated today are subject to significant margins of error. The path of economic activity will also be greatly influenced by the policies implemented as well as behavioral responses of both firms and households. According to the latest analyses prepared by the World Bank economists as of the end of March, the Polish economy is going to slow down to 0.4 percent in 2020, from 4.1 percent estimated for 2019. In 2021, the country’s economy may accelerate to a 2 percent growth rate, approximately.
“This is an unprecedented crisis on a global scale, with all regions of the world under serious stress. Poland is connected to European and global value chains and the coming months will bring a definite slowdown in the economy to levels that are hard to predict with any precision”, said Marcus Heinz, Resident Representative of the World Bank for Poland and the Baltic States.
“The key thing now is to make sure that policy measures are generous, fast and well-targeted. There is need for investments in healthcare and support for businesses and the labor force, including those with the greatest vulnerability to the crisis. Business support programs should be designed with minimum administrative requirements, in line with the principle help today, verify later,” added Marcus Heinz.
In the report, the World Bank produces two scenarios for growth outcomes in Europe and Central Asia. In the baseline scenario, the region’s developing economies are expected to contract in 2020 to -2.8 percent, and in the pessimistic scenario to -4.4 percent. Then, regional GDP will rebound as country policy measures are intensified, global commodity prices gradually recover, and international trade strengthens.
The COVID-19 pandemic is occurring at an already fragile time for the emerging economies in Europe and Central Asia. 2019 already saw a deceleration in economic growth. Since February, the region has faced an uphill battle to cope with the health crisis and the pandemic-related economic crisis.
The World Bank Group is taking broad, fast action to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. It is deploying up to $160 billion in financial support over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery.