After the March and April increases, the Monthly Economic Climate Index (MIK) of the Polish Economic Institute (PIE) and Bank Gospodarstwa Krajowego fell in May by 3.7 points to the level of 104.9 points. The May index is 5.1 points lower, compared to the highest value in 2022, recorded in January. The biggest drop by 10 points is recorded in sales value.

The lower result of MIK in May was also due to declines of other components below the neutral level: investments and orders, but also lower levels in the area of financial liquidity and employment. The sentiment of entrepreneurs may have been negatively affected by the uncertainty of economic conditions caused by Russia’s invasion of Ukraine and even higher inflation.

In the May survey by MIK, three out of seven components fell below the neutral level: investments, new orders and sales value. The lowest values of the economic situation indicators refer to investment outlays (91.4 points), which since January 2021 have not exceeded the neutral level (but are 42.3 points higher than in May 2021).

“The May reading of the Ministry of Finance indicates an impending slowdown in the Polish economy. The first symptoms can be seen in the sales results of companies in April. 29% of companies declare a decrease in sales compared to March, and only 21% of them saw an improvement. These results, combined with the persistent negative sentiment in investments and new orders, are the elements that herald the cooling down of the hot Polish economy”, says Andrzej Kubisiak, PIE’s deputy director for research and analysis.

The economist draws attention to interrupted supply chains, rising commodity prices in world markets and enormous volatility in world markets – which is beginning to affect the Polish economy.

“All these elements can be combined as challenges that have been growing since 2020, which were additionally intensified by the Russian and Belarusian invasions of Ukraine. There are quarters of a slowdown ahead, which will lead to a decline in economic growth and, consequently, to a technical recession”, Kubisiak predicts.

MIK is a tool for researching the economic mood of enterprises in Poland, developed by the Polish Economic Institute and Bank Gospodarstwa Krajowego. It is created every month on the basis of measurements made in seven key areas of business activity: sales value, new orders, employment, salaries, production capacity, investment expenditure, and financial situation.

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