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The difficult year of 2021 is over, and 2022 is beginning, a year that looks to be just as difficult as the previous one, and certainly full of uncertainty. We are not yet back to the 'new normality': we are still in a period of rapid perturbation. And all the time we have to be prepared for new challenges.
The year 2021 in the Polish economy and on the Polish market was a difficult period to assess unequivocally. On the one hand, many worst scenarios did not come true, but on the other hand, many hopes failed. Above all, it was not possible to overcome the pandemic and the resulting threats to development. A bad scenario was realised, in which a quickly invented vaccine failed to eradicate the plague. The virus causing covid proved to be highly malignant, capable of strong mutations and therefore difficult to eliminate. The whole year 2021 was therefore marked by greater or lesser economic restrictions, which may also threaten this year. Fortunately, it is clear that companies already know how to deal with lockdown much better than at the start of the pandemic.
The market experienced both good and bad trends. The good thing was undoubtedly the relatively fast recovery of production and income levels (pre-crisis GDP was already exceeded in Poland in Q2 2021). However, the situation was different in various industries: while industry, largely working for export, recorded relatively strong growth and quickly recovered from the recession, in trade this did not happen until the second half of 2021, while hospitality activity is still significantly lower than before the pandemic.
On the other hand, however, 2021 went down in history as a year of increasing inflationary pressure. In the first few months of the year, the inflation rate did not reach 3%. Then, however, prices accelerated month by month, to reach 8.6% in December . The fastest growth was obviously seen in the prices of energy, which rose sharply on the back of the global surge in gas and oil prices. However, it was not difficult to notice that apart from this component, which is beyond the control of Poland's economic policy, domestic food and service prices were also rising faster and faster. By the end of the year food price inflation had already reached 8.6%. Inflationary expectations began to rise more and more clearly, and fears were not calmed by the central bank's unfortunate communication with the market, its erratic forecasts and its belated reaction.
What can we expect in 2022?
It is already clear that we cannot expect an end to the pandemic, and the chaotic public health policy makes us fear that further lockdowns are possible. The outlook for economic growth is also looking worse than it might seem. All sectors of the economy have seen a significant deterioration in expectations for future prosperity in recent months. It seems that this is mainly due to inflationary fears, the drastic increase in energy prices and uncertain prospects for the inflow of funds from the European Union.
The greatest uncertainty undoubtedly lies in the area of inflation. The systematically increased forecasts made by the government and the National Bank of Poland already point to inflation that may reach double digits. In response to this, the central bank has already significantly raised interest rates, and is suggesting that they will rise further in the future (possibly to a level close to inflation, i.e. by several percentage points). In turn, the government has introduced two more "anti-inflationary shields", thanks to which inflation is to be temporarily contained. Temporary, as the main tool is the reduction, for a few months, of price-generating taxes. How effective these shields will prove to be remains to be seen. The problem lies in the fact that the introduced solutions, as well as the "Polish Deal" being implemented at the same time, will lead to an increase in the amount of money circulated on the market and an increase of the deficit in public finances. Thus, there is a danger that when the shields stop working, inflation may return with greater force.
What does all this mean for trade? A lot of uncertainty and a difficult operating environment. Consumer confidence indices have been falling for several months, although rising inflationary fears gave a somewhat artificial boost to purchases at the end of the year. Costs will rise: both for energy and wages. Add to this the still real threat of pandemic restrictions for business, and the outlook for 2022 looks very unclear. But well, such are the times, one must endure.
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