GDP in Poland

Poland - GDP (billions of Euros)

Growth moderates slightly in Q2

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.

FocusEconomics Consensus Forecast panelists expect that the economy will grow 3.7% in 2017, which is unchanged from last month’s forecast. For 2018, panelists foresee the economy growing 3.4%.