Polish GDP expanded a seasonally adjusted 0.3% y/y in the fourth quarter, (chart) coming nearly to a halt after a gain of 4.5% y/y in the preceding three months, the Central Statistical Office (GUS) said in a flash estimate on February 14.
The slowdown is no surprise as the economy is faltering in the wake of the shocks brought about by Russia’s aggression on Ukraine. Elevated inflation and the tightened monetary policy to fight it have affected consumption, while investment is weakening amidst heightened geopolitical uncertainty.
Data suggest that private consumption declined 1.7% y/y compared to a gain of 0.9% y/y in Q3, while the pace of investment growth unexpectedly increased to 5.2% y/y compared to growth of 2.0% y/y in the preceding three months,” according to PKO BP.
“The structure of growth is most likely still characterised by a positive contribution of inventories, indicating that the shift in production model from just-in-time to just-in-case has firmly taken root in Polish businesses,” PKO BP said.
“At the same time, we estimate that the positive contribution of net exports to GDP growth remained unchanged at 0.6pp in Q4, with expectations of a positive surprise from the revival of the export sector at the end of the year,” it added.
In q/q terms, the GDP declined 2.4% in Q4 after managing growth of 1% q/q in the third quarter, GUS data also showed.
“[The q/q contraction] looks inconsistent with some of the other hard activity data and may not be quite as bad as it seems … it may have been partly driven by a large fall in inventories,” Captial Economics said.
Growth is expected to come in at clearly below 1% in 2023, according to most analyses.
“The beginning of 2023 may mark the low point in the ongoing economic downturn,” Santander Bank Polska said.
But the recovery will be bumpy, it added.
“Due to lower than expected GDP growth in and decreasing chances of a swift release of funds from the EU’s pandemic recovery facility, our latest revision of the 2023 GDP growth forecast from 0.1% to 0.7% may prove premature,” Santander Bank Polsk said.
In unadjusted terms, Poland’s GDP expanded 2% y/y in Q4 versus a gain of 3.6% y/y in July-September, GUS data also showed.
Despite war raging just outside the border, Poland's GDP grew 4.9% in 2022 after expanding 6.8% in 2021.