Poland GDP Q1 2019


Poland: Economy maintains strong momentum at beginning of 2019

May 31, 2019

Poland’s economy grew 4.7% year-on-year in unadjusted terms in the first quarter of this year, supported by strong domestic demand, according to a revised estimate released by the Statistical Institute (GUS) on 31 May. The first-quarter outturn surpassed both analysts’ expectations and the preliminary estimate which projected a 4.6% annual expansion, although it was slightly down from Q4 2018’s 4.9% increase. On a quarter-on-quarter basis, growth jumped to 1.5% in seasonally-adjusted terms (Q4 2018: +0.5% quarter-on-quarter seasonally-adjusted), an over one-year high.

Unadjusted year-on-year figures highlighted the ongoing strength of domestic demand. Household spending was upbeat despite decelerating somewhat (Q1: +3.9% yoy; Q4: +4.2% yoy), supported by marked wage growth, modest inflation and stronger consumer confidence, although slower employment gains and an uptick in unemployment restrained the scope of the expansion. Meanwhile, government spending sped up (Q1: +6.4% yoy; Q4: +4.7% yoy) in the run-up to this year’s parliamentary elections. Fixed investment, meanwhile, jumped 12.6% (Q1: +8.2% yoy), lifted by low interest rates, supportive credit growth and the strong absorption of EU-linked structural funds. Lastly, destocking subtracted 1.1 percentage points to growth, a sharper subtraction than Q4’s minus 0.3 percentage point contribution, likely due to an expected slowdown in demand, especially from the Eurozone.

On the external front, net exports contributed 0.7 percentage points to growth in Q1, up from the 0.3 percentage-point contribution in Q4. Export growth moderated (Q1: +5.9% yoy; Q4: +7.9% yoy) owing to a continued weakness across the Eurozone, although the limited scope of the deceleration suggests regional supply chains remained intact. Import growth, meanwhile, also declined (Q1: +5.0% yoy; Q4: +7.8% yoy).

Economic activity will likely decelerate this year amid a less supportive external environment and a diminished contribution to growth from EU-driven fixed investment, and as the economy approaches the tail-end of the current business cycle. Nevertheless, sizable wage and job gains should sustain consumer spending and GDP, while the government’s fiscal measures, which are set to come into effect in H2, represent a key upside risk to growth. FocusEconomics Consensus Forecast analysts expect growth of 3.9% in 2019, which is up 0.1 percentage points from last month’s forecast, and 3.3% in 2020.

Author: Massimo Bassetti, Economist

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Poland GDP Chart

Poland GDP Q1 2019

Note: Year-on-year changes of GDP in %.
Source: Central Statistical Office (GUS) and FocusEconomics Consensus Forecast.

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