Poland: GDP growth improves in Q4 amid easing of pandemic-related restrictions
According to a preliminary estimate, GDP growth accelerated to 7.3% year-on-year in the fourth quarter, from 5.3% in the third quarter. As such, growth for 2021 as a whole came in at 5.8%, slightly above the 5.7% figure from January’s flash print and a strong rebound from the 2.5% contraction recorded in 2020. Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, economic growth eased to 1.7% in Q4, compared to the previous quarter’s 2.3% growth. Q4’s reading marked the slowest growth since Q1.
The improvement in the year-on-year print was spearheaded by the domestic economy, as an easing of pandemic-related restrictions released pent-up domestic demand. Private consumption growth accelerated to 7.9% year-on-year in Q4 from a 4.7% expansion in Q3, while fixed investment growth hit an over five-year high of 11.7% in the quarter (Q3: +9.3% yoy). Contrastingly, public consumption fell at the sharpest pace since Q3 2021, contracting 0.5% (Q3: +0.8% yoy).
On the external front, exports of goods and services growth slowed to 6.0% in Q4, marking the weakest result since Q3 2020 (Q3: +8.6% yoy). In addition, imports of goods and services growth softened to 13.2% in Q4 (Q3: +15.2% yoy), marking the slowest reading since Q1 2021.
Commenting on the outlook, Malgorzata Krzywicka, analyst at Erste Bank, said:
“Following strong economic recovery in 2021, growth dynamics will ease this year. In coming quarters, elevated inflation and higher interest costs will weigh on household spending. Moreover, the Russian invasion of Ukraine and subsequent sanctions will drag exports to Ukraine, Russia and Belarus down. The risks of disruptions in commodities’ supplies to Europe pushed Brent oil prices as well as the European gas prices further up, which will fuel inflation and increase production costs. Furthermore, the delay in acceptance of the Polish Recovery Plan poses downside risks to investments growth. However, with economic sentiment dampened and risks being elevated due the Russian invasion of Ukraine, both households and companies might become more cautious. We revise FY 2022 GDP growth down toward 4.0%–4.2%.”
Likewise, Rafal Benecki and Adam Antoniak, economists at ING, see growing risks to the Polish economy:
“The coming days and weeks will bring downside revisions to Poland’s GDP growth forecasts. Our initial estimates indicate that the military conflict will knock off at least 1.3 percentage points from our 4.5% GDP growth forecast for 2022. After the first wave of downward revisions, the median market forecast for this year is likely to be trimmed to about 3.0-3.5%. And further revisions remain on the cards.”