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No risk of recession in Poland this year: central bank chief

09.03.2023 21:30
The Polish central bank chief has renewed his prediction that the country’s economy will avoid a recession this year and that inflation will drop to the single digits.
Polands central bank chief, Adam Glapiński, holds a news conference in Warsaw on Thursday, March 9, 2023.
Poland's central bank chief, Adam Glapiński, holds a news conference in Warsaw on Thursday, March 9, 2023.Twitter/NBP

Adam Glapiński made the statement at a news conference in Warsaw on Thursday, Polish state news agency PAP reported.

It came after the Polish central bank's rate-setting Monetary Policy Council left interest rates unchanged on Wednesday, keeping the reference rate at 6.75 percent.

The panel earlier delivered a string of rate hikes in an effort to contain surging consumer prices.

Inflation in Poland stood at 17.2 percent in year-on-year terms in January, the country’s statistics office said last month.

‘No recession in 2023’

Glapiński, who heads the National Bank of Poland (NBP), told reporters on Thursday: “According to all the available data, we won’t enter a recession.”

He added that the Polish economy would record “a soft landing,” slowing down, but not contracting, before rebounding later. 

The central bank chief said an economic slowdown was “favourable” when it came to efforts to tame inflation.

“The slower the economy grows, the smaller the inflationary pressures,” he told reporters. 

The Polish economy grew 2 percent in the final quarter of last year, the country’s statistics office said in late February in a preliminary estimate.

Inflation to fall to ‘just above 7 percent’ by end of 2023

Glapiński said he expected inflation to decrease “very swiftly” towards the NBP’s target rate, which sits in the middle of a range from 1.5 percent to 3.5 percent. 

He added: “In a short period of time, inflation will fall to single digits. According to the latest forecast from March, it will be just above 7 percent at the end of 2023.”

Glapiński also said that inflation in Poland would "eventually drop" to 3.5 percent in 2025. 

‘Poland’s economy and public finances are stable’

Glapiński told reporters that the Monetary Policy Council kept interest rates unchanged on Wednesday “in line with market expectations” because “the economic situation is stable and Poland's public finances are stable.”

He said the rate-setting panel would maintain its policy of “wait and see” when it came to potential further interest rate hikes, adding that “everything depends on the situation, which we’ll be watching.”

“We’ll start to cut interest rates when we’re certain that inflation is heading swiftly towards the target rate,” Glapiński said, adding that he "couldn’t say at this point" if "it would happen this year or the next.”  

‘Polish economy is strong’

Glapiński stressed that ‘the Polish economy is strong.”

He stated: “The zloty remains a free currency. We’ve had the COVID-19 pandemic, the war and the shock on raw materials, yet our currency is free.”

He added: “We’ve not intervened to achieve a certain exchange rate, and yet the zloty is doing very well and will continue to do very well because Poland’s foundations are strong.”

'We have enormous reserves of gold'

Glapiński also said that "investing in Poland is profitable,” the PAP news agency reported.

“We are 100 percent safe when it comes to the legal system and the financial system; we have enormous reserves totalling USD 160 billion; and we have enormous reserves of gold,” he told reporters on Thursday. 


Source: PAP, businessinsider.com.pl

Click on the audio player above to listen to a report by Radio Poland's Michał Owczarek.