Poland’s GDP growth slows to 4.4% y/y in Q2

Polish real GDP growth slowed to 4.4% y/y in Q2’19 from 4.7% in Q1, missing the 4.5% consensus expectation, according to a flash estimate published Wed. by the Statistics Poland (GUS). Growth held below the 5% mark for the third quarter in a row and was the slowest since a growth pace of 4.3% y/y in Q2’17. Growth continues to slow from the peak of 5.5% y/y in Q3’17.

Seasonally adjusted growth slowed to 0.8% q/q in Q2 from a downwardly revised 1.4% in Q1 (cut from 1.5%). The downward revision saw three straight quarters reduced 0.1pp. Annual seasonally adjusted growth slowed to 4.1% y/y in Q2 from a revised 4.6% the quarter before (revised down from 4.7%). That is the slowest since 4.5% in Q2’17.

Domestic demand is likely to have slowed in the quarter in part as a big negative working-day impact hit June industrial production and other data prints and as the situation abroad worsened as well. With income growth still fast and unemployment rates at or near record lows, private consumption should hold up well, though retail sales was hit in June by base effects. Investment should be strong as well. But net exports could have had a tougher time than in Q1, when they upped growth by 0.7pp, considering the negative economic developments abroad.

Overall, GDP growth has been forecast at some 4.5% this year by many government officials and could still come in near that, though headwinds appear to be rising abroad. The original growth assumption was 3.8%, though, so anything above that will still be partly positive, though generous spending programs ahead of the elections would appear to mean the slower growth, the more potential pressure on public finances.

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