Polish GDP fell a seasonally adjusted 7.9% y/y in the second quarter after expanding 1.7% y/y in the first quarter, a flash estimate released by the Central Statistical Office (GUS) on August 14 showed.

The coronavirus (COVID-19) pandemic kept the Polish economy in lockdown throughout a considerable part of the second quarter with some of the restrictions only easing from May on.

GDP contracted 8.2% y/y in unadjusted terms versus an expansion of 2% y/y the preceding quarter below, GUS data also showed. In quarterly terms, economic growth slowed down 8.9% after a contraction of 0.5% q/q in Q1.

“The decline in GDP was the largest since the beginning of the 1990s and in q/q terms it was the second negative reading in a row, which meets the technical definition of a recession,” Santander Bank Polska said in a comment.

Still, the contraction is milder than expected and clearly Poland’s recession is currently the least severe in CEE and Europe.

“We expect GDP growth to improve in the coming quarters, although it is possible that it will remain negative until the end of 2020. The result for the entire year will probably be better than our current forecast of -3.8%, which we will probably revise soon,” Santander Bank Polska also said.

GUS does not provide details on the structure of growth in flash estimates but “we expect both private consumption and investment to post a negative growth,” Erste said. 

A detailed breakdown of the flash reading – together with a possible revision of the data – is scheduled for publication on August 31.

Poland's GDP expansion came in at 5.1% in 2018, the fastest expansion since 2007. In 2017, the economy grew 4.6%.