Poland: strong GDP growth in Q2 but activity set to weaken in H2

2011-08-31

In the second quarter of 2011 the Polish economy grew at a faster pace than was anticipated. The rate of GDP growth was only slightly lower than in the very-good first quarter; in seasonally-adjusted terms it was even marginally higher. Examining the various components of GDP, particularly significant is the further acceleration in gross fixed capital formation. Although it was driven mainly by EU-funded public investments, the figure also reflects a certain revival in private investment, as shown by Central Statistical Office (GUS) data on investment outlays at medium and large firms, which increased by 9% y-o-y in real terms in the first half of the year. Private consumption also kept growing at a solid (if somewhat slower) pace in Q2, remaining the main engine of economic growth in Poland. The country’s fiscal problems were reflected in public consumption figures, though, which fell into negative territory for the first time in several years. At the same time, however, Q2 was another consecutive quarter of positive contribution to GDP growth of stock rebuilding, and the impact of foreign trade improved to neutral, thanks to an acceleration in exports.
The GDP mix is thus a fairly balanced one, making it relatively well protected from cyclical downturns. Even so, we expect the pace of economic growth in Poland to soften in the coming quarters, due to a mixture of a high base of comparison and deteriorating global conditions. Nevertheless, we forecast that the resilience of the domestic market coupled with strong international competitiveness of Polish products will keep the country’s GDP growth above 3% in the second half of the year, even despite anaemic global activity.