Poland: Growth stays firm in Q2
Comprehensive data released by the Statistical Office on 31 August confirmed that Poland’s economy continued to grow at a brisk pace in the second quarter. GDP expanded a solid 5.1% over the same period last year, which was broadly unchanged from the first quarter’s 5.2% increase and one of the strongest readings in the past decade.
The domestic economy remained in the driver’s seat in Q2, fueling the strong momentum. Private consumption growth inched up to 4.9% annually from Q1’s 4.8%, supported by a tightening labor market and high consumer sentiment. Government spending also gathered steam, rising 4.4% (Q1: +3.6% year-on-year). Investment growth, however, moderated in the quarter, driving the overall slowdown. Moreover, fixed investment expanded 4.5%, which was down notably from Q1’s 8.1% increase and despite the boost from EU funds. Tax changes that came into effect in July may have weighed on businesses decisions in the quarter.
Meanwhile, net exports contributed to growth in the second quarter, contrasting the first quarter’s subtraction. Export growth picked up to 6.9% annually in Q2 (Q1: +1.1% yoy), helped by a solid German industrial sector. Import growth also accelerated in the quarter (Q2: +6.5% yoy; Q1: +3.5%).
On a quarter-on-quarter basis, the economy grew 1.0% in seasonally-adjusted terms, below the first quarter’s 1.6%.
Looking ahead, domestic demand is expected to continue driving the economy in the second half of the year, as tailwinds from accommodative monetary policy, a tight labor market and EU-funds remain in place. However, growth is seen cooling somewhat from H1’s highs.
Commenting on Poland’s outlook, Rafal Benecki, a chief economist at ING, adds:
“In our opinion, GDP growth peaked in the first half of 2018. In 2H18, we expect an average GDP growth rate of 4.4% YoY due to a slower pace of consumer spending and a lower contribution of inventories. The contribution of net exports in the euroland should be slightly positive or close to zero.”