Polish GDP expanded 3.1% on the year in unadjusted constant prices in the second quarter of the year, the country’s statistical office reported in flash estimate on August 12.
The reading comes below expectations for 3.3% annual growth in April-June. As flash estimates do not contain detailed breakdown of data, analysts speculate the somewhat disappointing result owes to weak investment and continued below par absorption of European Union funds under the new 2014-20 budgetary window. That leaves private consumption as the main driver, with the government’s child benefit programme seen as a potential element to offer momentum.
In adjusted terms in constant prices, the economy expanded 3% y/y and 0.9% on a quarterly basis. With growth below expectations both in the first and the second quarters, analysts predict economic expansion in 2016 will clearly miss the government’s target of 3.8%.
“Even with expected improvement in economy during the final two quarters of the year, the readings from the first half of the year mean growth will not exceed 3.4% in 2016,” Bank Millennium writes.
Erste concurs, predicting that the recovery will be rather “moderate.” “Weakening market sentiment - PMI on downward trend for last few months - seems to weigh on investment activity. Uncertainty, driven by both local as well as global issues, seems negative for investment plans,” the analyst points out.
Still, even at 3% for the full year, growth will be considered “robust” by the Monetary Policy Board (MPC), which will retain the status quo. “We do not expect the MPC to change its rhetoric and stability of rates remains our baseline scenario, especially as the MPC seems unconcerned by ongoing deflation,” Katarzyna Rzentarzewska writes.