Polish retail sales grew 6.8% y/y in July, statistics office GUS announced on August 18.
The reading marks a rebound in the pace of growth after turnover dropped to 5.8% in June. That is a welcome sign that private consumption, fuelled by the tightening labour market, continues to be a major driver of economic growth. With industrial production growth also strong through the seventh month of the year, the Polish economy appears to have started the second half of the year in rude health.
Analysts at BZWBK called the reading “a decent result showing strong demand generated by households… The pace of growth in the durable goods category (furniture, white goods and consumer electronics) returned to c9% y/y (11.7% m/m) which in our view highlights the high level of optimism expressed in survey-based indices.”
The data “suggests that the economy grew by around 4.5% y/y at the start of Q3,” wrote analysts at Capital Economics. “That would be even stronger than the impressive rates of expansion seen in the first half of the year.”
However, they add that they expect the ongoing boom to be short-lived. “We think this golden period of strong economic growth will soon start to fade. We expect growth to hit a peak in Q3, before losing momentum in 2018-19 as the EU fund-related rebound in construction fades, interest rates rise and fiscal policy becomes less supportive,” they wrote.