World Bank: Investments in Poland will accelerate; key digitization for companies
In the next few years, the revival in investments in Poland will gain pace, also thanks to the expected financial resources from the European Union budget, according to Asli Demirgüç-Kunt, the World Bank's chief economist for Europe and Central Asia. In her opinion, in order to maintain the competitiveness of Polish companies, it is necessary to continue the transformation to the digital economy.
The economist, referring to the latest World Bank report on the macroeconomic prospects of Europe and Central Asia, pointed out that Poland is a well-diversified economy, which positively distinguishes it from the countries of the region, and that in the coming "A few years" in Poland, the revival in investments will gain pace, also thanks to the expected inflow of additional funds from the European Union.
"The Polish economy was relatively resilient to the COVID-19 crisis, and by Q2 2021 production had returned to pre-pandemic levels, in part due to the release of pent-up demand thanks to macroeconomic support. The economic recovery also reflected strong export growth as activity in major trading partners strengthened. As a result, growth forecasts have been revised upwards to 4.5% this year and 4.7% in 2022, and the recovery in investment will gain momentum in the next few years," said Demirgüç-Kunt.
In the October note, the World Bank raised its expectations regarding the growth of Polish GDP in 2021 to 4.5%, and in 2022 to 4.7%. This means that the forecasts are higher than in June by 0.7 pp, respectively. percent and 0.2 percentage points
Demirgüç-Kunt also pointed out that in the context of investment attractiveness for foreign capital, Poland is a well-diversified economy, with strong trade and financial ties with the euro area and integrated with global value chains.
In her opinion, the key area of activity of the Polish government in the short-term horizon should be "careful" adjustment of macroeconomic policy parameters, including in order to control inflation expectations.
"The short-term outlook will continue to be shaped by pandemic trends, including the rate of vaccination and the ongoing spread of COVID-19 variants. As the cyclical recovery continues, careful macroeconomic policy adjustments will be needed to ensure the reconstruction of the fiscal space and the maintenance of stable inflation expectations. Otherwise, higher inflation could strengthen and 'de-anchor' inflation expectations, the price pressure on assets could increase or the global financing conditions could tighten sharply, which could lead to a faster than expected withdrawal of monetary policy support and a weakening of the economic recovery," she added.
The World Bank economist also pointed out that although banks in Poland remain well capitalized, the development of the financial sector still requires close monitoring, as the crisis has affected banks' profitability.
In her view, government actions that accelerate potential output growth - including those that address the impact of the pandemic on human capital and increase investment productivity - may help ease inflationary pressures, ensure an inclusive recovery, and maintain per capita income convergence in the longer term with the euro area.
Demirgüç-Kunt recalled in an interview, the position of the World Bank contained in the October report "Europe and Central Asia Economic Update", which indicated that in order to increase the productivity of companies, stimulate growth and create new jobs, Poland should maintain a strong and competitive business environment .
She also added that it is important that Poland, looking at the economic situation in the long term, continues the trend of transition to the digital economy.
"Accelerating the take-up of digital technologies - as observed in 2020 along with the increasing use of e-commerce, telemedicine and remote education technologies - can help increase resilience to future negative economic shocks. In addition, ensuring the effective absorption of large EU funds could help further digital transformation and It would help Poland to make progress in meeting its long-term development goals and assist in the structural transformation of the economy as the world sticks to decarbonisation in the coming decades, "s he added.
When asked what, in the opinion of the World Bank, the direction of changes may help Polish companies increase their resilience and productivity in the future, especially when the epidemic is not over yet, the economist first of all pointed to the need to dynamise the digitization of Polish enterprises.
"Accelerating the adoption of digital technology by companies can lead to significant gains in productivity, as long as it is complemented by investments in digital solutions for production or supply chain management. Poland has one of the lowest levels of business digitization in the European Union, but significant progress has been made in response to the pandemic. The measures that sustain this progress can help to further narrow this digital divide with the rest of the European Union," said Demirgüç-Kunt.
"Providing a strong, competitive business environment that promotes market entry and development, as well as the exit of unprofitable companies from the market, is important for improving dynamics and productivity," she added.
She also pointed out that, in the opinion of the World Bank, in the medium term, efforts to accelerate structural reforms in areas such as energy efficiency, resilience to climate change and their adaptation, as well as innovation and entrepreneurship are of key importance for the competitiveness of Polish enterprises.
Source: World Bank and ISBnews