Polish economy amid Covid-19 pandemic

Ozge Gurses
| May 6, 2021
Polish economy
Poland is the seventh-largest economy in the European Union and the largest of Central and Eastern European (CEE) economies. The Polish economy accounts for 36% of the CEE’s total GDP.

Poland has emerged as a dynamic market over the last three decades and has become a major player within Europe. The country has increased its GDP per capita by 130% since 1990 while the income in the Euro area grew barely by 50% with in the same period.

The Polish economy had an uninterrupted growth until 2020, averaging 4.2% per year between 1995-2019. Since early 2020, the resilience of the Polish economy has been tested by the economic and social impacts of the COVID-19 pandemic.



The COVID-19 pandemic caused the Polish GDP to contract for the first time in over 25 years. Annual growth shrank by 2.8% in 2020. Despite that, the country is one of the least affected in European countries as a result of its well-diversified economy, low dependence on tourism and services sectors.

In 2021, the IMF expects an economic recovery of 3.5% (against 2.7% growth in its earlier forecast).

Government Debt

The Covid-19 related support measures caused Poland’s debt to increase in 2020.

The government debt to GDP was expected to rise from 46% to above 57% in 2020 and stabilize around this level for the next couple of years.


Poland’s consumer price inflation amounted to 3.2% in March 2021, compared to the same month of the previous year. It was the highest rate since September 2020 and above the medium- term target (2.5%) of the National Bank of Poland.

In its meeting held on 7 April 2021, the Bank indicated that the increase in inflation was driven by growth in fuel prices originating from a further rise in oil prices in international markets, and a rise in inflation was probable in the coming months.

The headline inflation rate in Poland is expected to pick up to 4.3% in April 2021 which is the highest level since March 2020.

Unlike Euro area or the United States, the elevated rise in prices has been persisting by mid-2019.

Interest Rate

The National Bank of Poland kept its benchmark rate on hold at 0.1% during its April meeting to support GDP growth amid an uptick in inflation and a weaker Polish Zloty.
On 28 May 2020, the Bank had lowered the benchmark rate by 40 bps to 0.1% from 0.5%, bringing borrowing costs to fresh record lows to combat the negative effects of the spread of COVID-19.

In 2021, the monetary authority intends to tolerate higher inflation and continue its accommodative monetary policy to ensure sufficient liquidity for banks to support loan growth.

The next monetary policy meeting will be held on 07 May 2021.


Unemployment Rate

The unemployment rate edged down to 6.4% in March 2021 from 6.5%  in the previous month. The rate was at 5.4% a year earlier.

Although the current unemployment rate remains at the highest level since March 2018, Poland has the third-lowest unemployment rate in the European Union after Czechia and Germany.

Looking forward, the unemployment rate in Poland is estimated to stand at 6.4% in 12 months.

The unemployment rate is defined as the share of the unemployed in all potential employees available in the labor market.


In March 2021, the Polish zloty had posted its weakest level against the Euro since the COVID-19 pandemic started a year ago. The local currency hit 4.67 on 31 March 2021, depreciating around 3.2%.

PLN/EUR average rate for April 2021 was 4.56. The currency lost about 2% against the Euro.

PLN/USD average rate for April 2021 was 3.81. The currency lost about 4.65% against the US Dollar.



According to the World Health Organization, Poland recorded above 2.7 million confirmed COVID-19 cases since the pandemic began last year in March 2020.

On 01 April 2021, the country registered a record number of daily cases as 35,253 people.

The cumulative death toll has reached above 67 thousand people since March 2020.

The number of vaccine doses administered per 100 people reached 29.2 as of 30 April 2021.

Source: National sources via EquityRT MacroAnalytics

Report by Özge Gürses | Macro Research at EquityRT

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Source: EquityRT MacroAnalytics

Disclaimer: The information in the publication is not an investment recommendation and it is not an investment or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but EquityRT does not represent that it is accurate or complete. EquityRT does not accept any liability for any direct, indirect, or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author, as of the date of the publication and are subject to change without notice.

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