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Poland GDP Q4 2017

Poland: Growth accelerates further in Q4 on buoyant domestic demand

Poland’s economy picked up pace in the fourth quarter, according to a second estimate released by the Statistical Institute on 28 February. GDP expanded 5.1% in Q4 over the same period in 2016 (Q3: +4.9% year-on-year), confirming the flash estimate. This result brought full-year growth to 4.6%, up from the 2.9% increase recorded in 2016 and the strongest expansion in six years. The acceleration in Q4 came on the back of stronger domestic demand, which more than offset a negative contribution from the external sector. Furthermore, the recovery in fixed investment intensified, while consumer spending, which made the biggest contribution to growth, remained buoyant. In seasonally-adjusted quarter-on-quarter terms, GDP rose 1.0% in Q4, slightly down from Q3’s 1.2% increase.

The domestic side of the economy continued to fire on all cylinders in Q4. Private consumption increased robustly (Q4: +4.9% yoy; Q3: +4.8% yoy), again boosted by declining unemployment and surging wages. Moreover, growth in government consumption gained considerable strength in Q4, expanding 5.4% in annual terms (Q3: +1.9% yoy). Gross fixed investment also jumped in the quarter (Q4: +11.3% yoy; Q3: +3.3% yoy), buttressed by increasing EU funds and favorable financing conditions. As a result, domestic demand expanded 6.1% in the final quarter of the year, up significantly from the previous quarter’s 3.9% expansion, and despite falling inventories.

Strong growth in fixed investment caused imports to surge, weighing on the overall GDP figure. Exports increased a robust 6.8% in annual terms compared to a stronger 7.6% expansion in Q2. Imports, on the other hand, accelerated notably from a 5.7% expansion in Q3 to 9.2% jump in Q4. As imports outpaced exports, the external sector’s net contribution to growth in Q4 was minus 0.8 percentage points, a downturn from Q3’s plus 1.1 percentage-point contribution.

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