News - 1 March 2022

Negative impact of the Russian invasion on Ukraine on the Polish economy in 2022

The Russian invasion of Ukraine and the ongoing war there will have a negative impact on the result of the Polish economy in 2022. Although the scale of the impact is currently very difficult to determine, as it depends primarily on the further course of the war, the sanctions imposed during its course, their duration, as well as other political and military decisions, it is possible to identify several channels through which this negative impact on the Polish economy will occur (or is already occurring). These factors generally have a stagflationary character, meaning they simultaneously affect the decrease in economic activity and the increase in prices.

1. Weakening of the Polish złoty

The exchange rate of the US dollar against the złoty changed from 3.99 (February 23, 2022) to about 4.22 (March 1, 2022). Against the euro, the change is from 4.54 to 4.72. Maintaining or intensifying this phenomenon will strengthen the already strong inflationary pressure and increase the pressure for interest rate hikes. It will result in a stronger (compared to no war) limitation of the purchasing power of Poles, a limitation of consumer demand, and investment.

2. Increase in energy commodity prices

Similar to the exchange rate, maintaining or intensifying this phenomenon will result, among other things, in an increase in fuel prices and will be another factor stimulating inflation.

3. Import restrictions

Russia has a key share in Polish fuel, aluminum, and timber imports. It is also a key producer of palladium internationally. Ukraine is an important exporter of cereals and iron. The reduction in the supply of these goods in the international market is another inflationary impulse. A very large macroeconomic shock would be stopping the gas transmission to Poland and Europe. This would result in a very strong increase in prices, slow down European industry, and stifle consumption and investment.


More data on the impact of the war in Ukraine on the Polish economy can be found in the PMR special report:


How the war in Ukraine will affect the Polish economy in 2022 as well as the retail trade, medical, construction, and ICT sectors.

4. Decrease in export

Russia is the seventh largest of Poland’s export partners, with a share of about 3% and a significant presence in sectors such as chemicals and machinery. Restricting Polish exports to Russia and Ukraine will slow down GDP growth, even though producers will seek other markets.

5. Investor sentiment and perception of Poland

These factors potentially translate into, among other things, higher cost of servicing Polish debt and a limitation of foreign direct investment. Proximity to war can imply an increase in risk aversion among investors. However, if Poland continues to be evaluated as stable, the negative impact through this channel should be negligible.

6. Domestic demand limitation

The war on the eastern border may result in worsening consumer sentiment in Poland. Their increased caution and changes in the “shopping basket” that involve an increase in the share of spending on basic goods can be observed. Consumers may also make deliberate decisions not to buy goods from Russia and Belarus. Due to this factor, despite increased inflationary pressure, the pace and scale of interest rate hikes in Poland may not be significantly increased.

7. Investment limitations

As a result of increased government and local government spending (e.g., on assistance to war refugees, humanitarian and military aid to Ukraine, potentially increased defense spending), at least part of investment expenditures may be limited, which will restrict the pace of economic growth.

8. Increased migration

The influx of war refugees may result in settlement of some in Poland for a longer period of time. This would increase the potential labor force, support GDP growth, and limit wage and inflationary pressure.

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Maciej Gazda

Head of forecasting and econometric modelling