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Poland GDP Q3 2020

Poland: GDP slides at slower rate in the third quarter

A second reading showed that GDP slid at a more moderate pace of 1.5% year-on-year in the third quarter (previously reported: -1.6% yoy), contrasting the 8.4% contraction logged in the second quarter.

The upturn reflected an improvement in domestic as well as external demand. Private consumption increased 0.4% in the third quarter, which contrasted Q2’s 10.8% contraction, as consumers resumed their purchases following the reopening of businesses. Moreover, government consumption expanded 3.4% in Q3, matching Q2’s rise, while fixed investment slid at a more moderate pace of 9.0% in Q3 (Q2:-10.7% yoy).

On the external front, exports of goods and services increased 2.0% on an annual basis in the third quarter, which contrasted the second quarter’s 14.5% contraction, largely owing to recovering demand from the EU. In addition, imports of goods and services dropped at a slower pace of 1.0% in Q3 (Q2: -18.0% yoy).

On a seasonally-adjusted quarter-on-quarter basis, economic growth bounced back, with GDP growing 7.9% in Q3, contrasting the previous quarter’s 9.0% decrease.

After contracting notably this year on the hit from coronavirus containment measures, the economy is projected to rebound in 2021. Private consumption and fixed investment are seen expanding strongly, supported by fiscal relief measures. A high level of uncertainty due to the prolonged health crisis and subsequent further restrictions clouds the outlook, however.

Commenting on the outlook for the Polish economy, Rafal Benecki and Dawid Pachucki, chief and senior Poland economists at ING, reflected:

“The new pandemic wave, a deterioration in hard data in October and a collapse in soft figures in November indicate a renewed GDP drop in 4Q20. […] We estimate that the GDP decline should deepen to about -4.5% YoY in 4Q20, yielding -3.3% YoY in 2020 on average. 1Q21 activity is at risk as well – most likely only a fraction of the population will be vaccinated by then. In addition, historical data shows that the turn of February and March is a traditional flu peak in Poland. We estimate a quicker economic recovery starting from 2Q21.”

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