The Polish economy accelerated growth to 4% y/y in constant prices in the first quarter, Poland’s stats office GUS announced in a flash estimate on May 16.
The result was in line with strong readings across Central & Eastern Europea. The pace of the Polish expansion is in line with high expectations created by the performance of key sectors in January-March. Strong retail and industrial production data added to a return to form in construction. The latter suggests investment mounted a recovery in early 2017 after a deep lull last year.
A detailed breakdown will be issued on May 31. GDP expanded 1% q/q, GUS also noted.
Private consumption, driven by the tightened labour market, likely grew 4.6% y/y in the first quarter, according to Bank Millennium. Investment likely returned to positive growth as well, the bank adds.
With the growth surging in the first quarter at the fastest rate since the first quarter of 2015, the outlook for the year has also improved. “Such a solid pace of GDP growth makes us revise the 2017 GDP growth forecast from 3.3% to 3.8%,” Erste notes. Bank Millennium is less exact, but still bullish, pitching this year’s growth at “around 4%”.
The growth reading will only create an additional stir on the course of monetary policy. However, BZ WBK maintains the view that despite the stronger than expected first quarter expansion, the Monetary Policy Council (MPC) is unlikely to look to hike rates as long as inflation does not increase.
However, hawkish talk at the May 17 MPC meeting might get a little more airtime, Capital Economics appears to suggest. “Today’s strong GDP figures may make central banks in the region more inclined to bring forward the start of monetary tightening cycles,” the analysts write.