Poland: Growth falls to three-year low
November 30, 2016
Poland’s economy lost steam in the third quarter as the external sector and plummeting investment dragged on growth. According to more complete data released by the Central Statistical Office of Poland on 30 November, GDP expanded 2.5% in Q3 over the same period of 2015, the worst result since Q3 2013. The figure matched the preliminary estimate and was below Q2’s 3.1% expansion.
Taking a look at the details on the domestic side of the economy, fixed investment plummeted 7.7% in Q3, the largest contraction since Q1 2010. Reduced EU development funds have caused a sharp slowdown in public investment this year, while heightened uncertainty is likely discouraging firms from spending. Meanwhile, both private and government consumption picked up on the back of stimulus measures. Private consumption recorded the best result since Q1 2009, expanding 3.9%, as tailwinds from a tightening labor market and government cash injections to families bore fruit (Q2: +3.3% year-on-year). Government spending picked up from Q2’s 3.9% growth to a 4.9% expansion in Q3.
The external sector dragged on GDP in Q3 amid a sharp slowdown in export growth. Exports grew 6.8%, which was down from the multi-year high of 11.4% in Q2 and reflected subdued external demand. Import growth also lost steam, coming in at 7.8% after growing 10.0% in Q2.
The consumption boom seen in Q3 is likely to persist as the government continues to unveil fiscal easing measures. This, combined with a rebound in investment, should allow the economy to gain steam next year.