Poland: Growth weakens to over-six year low in Q1 but surpasses expectations
The economy grew 1.9% year-on-year (yoy) in the first quarter of this year, marking the weakest expansion since Q3 2013, according to a preliminary estimate released by the Statistical Institute (GUS) on 15 May. The reading came in well below the 3.2% year-on-year expansion recorded in Q4 but surpassed market expectations.
Ahead of comprehensive first-quarter national accounts on 29 May, faltering industrial production and business sentiment in March most likely restrained investment activity. Moreover, plunging retail sales in March due to containment measures and a higher unemployment rate in Q1 point to cooling consumer spending. That said, the intensity of the deceleration in private consumption was likely cushioned by healthy wage growth and panic-buying, which led to a surge in retail sales in February.
On a quarter-on-quarter basis, GDP contracted 0.5% in seasonally-adjusted terms, contrasting Q4’s 0.2% uptick.
GDP is projected to plunge this year, with the downturn largely concentrated in Q2. Lockdown measures, which are being gradually lifted, will hit consumer spending, while vanishing European demand and disrupted supply chains will weigh on the industrial sector. The severity and length of the pandemic remains the key risk to the outlook.