ShowCASE: Trade, Innovation, and Productivity

July 27, 2021

According to the latest European Commission forecasts published on July 7, the EU economy will return to its pre-pandemic level in the last quarter of 2021 or one quarter earlier than expected in the previous forecast. This shows an expected higher EU economic growth compared to the spring projections. According to the new forecast, the EU economy will grow by 4.8% in 2021 and 4.5% in 2022. The improvements in growth prospects can be attributed to the progress made in vaccination and other virus containment strategies that led to a revival of economic activity. However, the inflation rate is expected to reach 2.2% in 2021 and 1.6% in 2022, which are respectively 0.3% and 0.1% higher than projected by the spring report. The new forecast also records the economic sentiment indicator (ESI)  in May 2021 at the  highest level since February 2018 – which implies a high optimism among consumers and businesses about the EU economy. 

In Poland, the economic growth is expected to reach 4.8% and 5.2% in 2021 and 2022, a rate comparable with other countries in Central and Eastern Europe. Therefore, compared to the spring forecast, Poland's economic growth rate is expected to be relatively higher in 2021 (above 0.8%) and lower in 2022 (0.2%). Poland's inflation rate – the second highest in the EU after Hungary in both 2021 and 2022 – is projected at 4.2% for 2021 with a drop to 3.1% in 2022.