Poland: Growth moderates slightly in Q2
August 31, 2017
Poland’s economy slowed down slightly in Q2, according to a second estimate released by the Statistical Institute on 31 August. GDP expanded 3.9% in Q2 over the same period in 2016, decelerating slightly from Q1’s 4.0% year-on-year rise. The deceleration in Q2 GDP came on the back of a weaker performance by the external sector, but still represents a solid expansion; the economy has been undergoing a growth spurt in response to a healthy Eurozone, robust domestic demand and a recovery in investment after a slow 2016.
The domestic side of the economy, on the other hand, fared strongly in Q2. Private consumption rose (Q2: +4.9% year-on-year; Q1: +4.7% yoy), underpinned by a tight labor market and lower inflation. Furthermore, government consumption also gathered momentum in Q2, expanding 2.4% in annual terms (Q1: +1.0 % yoy). In addition, gross fixed investment rebounded in Q2 as EU-funded investments ramped back up after declining sharply in 2016 (Q2: +0.8% yoy; Q1: -0.4% yoy). All in all, domestic demand expanded a robust 5.8% in Q2 (Q1: +4.2% yoy).
The external sector did not perform as well in Q2, as exports grew only 2.8% in annual terms compared to a strong 8.3% expansion in Q1. Industrial output, especially for automakers, slowed in June. Imports, on the other hand, decelerated from Q1 to Q2, slightly offsetting weaker export growth (Q2: +6.1% yoy; Q1: +8.7% yoy). The overall net contribution to growth in Q2 was minus 0.9 percentage points (Q1: -0.1 percentage points). A drag on the external sector had been expected due to the appreciation of the zloty and thriving private consumption, which should translate into higher imports.
Author: Lindsey Ice, Economist