Polish growth defies predictions of slowdown in Q3

Polish growth defies predictions of slowdown in Q3
By bne IntelliNews November 14, 2018

Polish GDP growth pushed to a seasonally adjusted 5.7% y/y in the third quarter, a flash estimate released by the Central Statistical Office GUS on November 14 showed.

The result is a surprise to the upside, as consensus predicted a slowdown in the second half of the year after dynamic expansion in the first six months.

“The figure is very strong given the underlying performance of the industry and retail sales in the third quarter. Slightly lower growth of the industry and similar dynamics of retail sales growth have not pointed to such an acceleration of the economy,” Erste said in a comment on the GUS release.

Consumption likely remained the key growth driver in the third quarter, with investment growth moderating, Santander Bank Polska said.

Inventories could prove another factor contributing positively to growth while net exports were negative or neutral, the bank added.

A detailed breakdown of the flash reading – together with a possible revision of the data – is scheduled for publication on November 30.

The economy expanded by a seasonally adjusted 1.7% q/q – 0.6pp above the q/q reading for the second quarter – while growing an unadjusted 5.1% y/y, GUS also reported.

The very strong growth figure in the third quarter is having some analysts revise their forecasts for full-year growth in 2018.

“Growth is likely to land somewhere between 5.2%-5.4% in 2018,” Erste said.

“Growth in 2018 could be at least 5% even though we are expecting economic expansion to slow down in the coming quarters mainly due to the weakening sentiment in international trade,” Santander Bank Polska said.

The accelerating economy could also bring forward the tightening of the monetary policy cycle, according to Capital Economics. Poland's rates have lingered at a record-low 1.5% for over three years now with moderate inflation despite rising wages.

Polish GDP expansion came in at 4.6% in 2017, the fastest expansion since 2011. In 2016, the economy grew only 2.9%.