Consumption in Poland

Poland - Consumption

Growth hits multi-year high in Q2

According to a preliminary reading, GDP rebounded in the second quarter, growing 11.1% year-on-year and contrasting the 0.9% contraction logged in the first quarter. The gradual rollback of Covid-19 restrictions at home and abroad likely benefited the economy, although the pace of recovery was flattered by a low base effect.

The upturn reflected a broad-based improvement in activity. A lower unemployment rate and solid wage growth likely buoyed private consumption, which increased a marked 13.3% in the second quarter, up from the first quarter's 0.2% expansion. Moreover, public spending accelerated to 3.8% in Q2 (Q1: +2.5% yoy) as the government maintained a loose fiscal stance to help the economy shrug off the impact of the pandemic. Similarly, fixed investment growth sped up to 5.0% in Q2 from 1.3% in the previous quarter.

On the external front, exports of goods and services increased 29.3% on an annual basis in the second quarter, which was above the first quarter's 5.7% expansion. The improvement reflected rekindled foreign demand amid progressing vaccination efforts abroad. Meanwhile, imports of goods and services expanded at a quicker pace of 35.8% in Q2 (Q1: +10.0% yoy). As a result, the external sector weighed on the headline reading.

Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, economic growth sped up to 2.1% in Q2 from 1.3% in the previous period.

Commenting on the second quarter’s release and the growth outlook, Malgorzata Krzywicka, analyst at Erste Bank, said:

“Q2 2021 GDP growth confirmed the ongoing recovery of the Polish economy. While private consumption rebounded visibly, marking strong double-digit dynamics, investment activity was somewhat weaker than expected. A high contribution of inventories could, in our view, reflect ongoing supply-side issues and stockpiling of unfinished goods by companies. Given the better-than-expected performance of the Polish economy in H1 2021, we revise our FY 2021 growth forecast up by 0.5pp to 5.3% and FY 2022 by 0.2pp to 5.6%.”

Meanwhile, Rafal Benecki and Dawid Pachucki, chief and senior Poland economists at ING, said:

“Continued disruptions in supply chains and rising Covid-19 cases due to the spread of the Delta variant may somewhat slow the pace of the rebound in Q3 2021. In our view, however, the GDP outturn should still be strong. We maintain our forecast of GDP growth of 5.4% yoy on average in 2021.”

FocusEconomics panelists forecast the economy to expand 4.8% in 2021, which is unchanged from last month’s estimate. For 2022, our panelists see growth at 5.0%.