Polish GDP growth came in at an unadjusted 3.2% y/y in the fourth quarter, slowing down 0.7pp versus y/y growth in Q3, a preliminary estimate released by the Central Statistical Office GUS on February 28 showed.

Domestic demand drove the headline result in October-December, although the pace of its growth slowed down to just 2.2% y/y versus 3.3% y/y in the third quarter. Investment growth weakened improved somewhat to 4.9% y/y, compared to an expansion of 4.7% y/y in July-September, data also showed.

Growth in overall consumption decelerated to 3.2% y/y in the fourth quarter, 0.8pp below the third quarter reading. Household consumption expanded 3.3% y/y, marking a slowdown of 0.6pp versus y/y expansion in the previous quarter.

Such composition of economic growth is a surprise, according to Bank Millennium.

“Private consumption remained the main driver of the economy but … its contribution to growth was … 1.6pp, the lowest in four years. That is a disappointing result given the rising wages, low unemployment and the increased scale of social transfers,” Bank Millennium said in a comment to the GUS release.

That said, the Q4 data are now less relevant to the outlook in the context of the coronavirus worldwide spread, which will likely weaken the Polish economy further in the first quarter. But some analysts think the impact might not be so profound.

“We expect GDP growth to stabilise in the first quarter close to 3% y/y while consumption growth should hover around the same levels. We also expect net exports contribution to increase growth and inventories to become neutral,” ING said. 

“On the other hand, investment dynamics are likely to fall further to approximately 2% y/y in [the first quarter], given weak public spending. [But] given the coronavirus epidemic and activity in March, the risk to our forecast are clearly tilted to the downside,” ING added.

The headline figure adds 0.1pp to the flash estimate published in mid-February. Growth came in at 3.7% y/y in adjusted terms, an upward revision of 0.2pp against the flash estimate but a slowdown of 0.3pp versus y/y expansion in the third quarter.
 
In unadjusted q/q terms, the economy expanded 0.3%, adding 0.1pp to the flash estimate; it slowed down 0.9pp versus q/q reading in Q3.

Poland's GDP expansion came in at 4.1% in 2019, GUS also said, a slight upward revision from the 4% figure published earlier. That is a slowdown of 1.1pp versus 2018.