Poland: GDP records largest drop on record in Q2
According to a preliminary estimate, the economy contracted a record 8.2% on an annual basis in the second quarter, contrasting the first quarter’s 2.0% increase and reflecting the full brunt of the Covid-19 shock. That said, the reading beat market analysts’ expectations of a 9.0% decline.
Q2’s record downturn came on the back of the lockdown measures introduced in April to halt the spread of the coronavirus. Retail sales nosedived in the quarter amid rising unemployment, boding poorly for household consumption. Meanwhile, business sentiment deteriorated sharply in Q2, hinting at constrained investment activity.
On a seasonally-adjusted quarter-on-quarter basis, economic activity fell 8.9% in Q2, significantly below the previous quarter’s 0.4% decrease.
Looking ahead, the economy is expected to shrink significantly this year as the global health crisis and associated lockdown measures hit domestic and foreign demand. While the government’s sizable fiscal stimulus should cushion the blow and lay the foundations for a rebound ahead, flare-ups of the pandemic and elevated economic uncertainty pose key downside risks.