The Polish economy is beginning to recover after a period of slowdown. What’s the latest GDP reading, and which factors can we expect to affect economic growth in the near future?
According to the flash estimate, Poland’s GDP, seasonally unadjusted, was higher by 1.9% in the first quarter of 2024 y/y, compared to a 0.4% decrease in the corresponding period of 2023. The consensus of economists' forecasts predicted a reading of 1.7-1.8% y/y.
Polski Instytut Ekonomiczny (PIE) expects the GDP growth rate to approach 2.8% in the second quarter, reaching its temporary maximum. The rebound is due to an increase in industrial activity (sold production of industry increased by 7.9% y/y in April) as well as private consumption, supported by falling inflation (2.4% y/y in April), rise in wages (11.3% y/y nominal growth in April), a tight labor market, and an increase in benefits and social transfers.
However, it is also worth noting that Poland's PMI fell to 45.9 in April 2024 from 48.0 in March 2024, indicating a twenty-fourth successive monthly deterioration in business conditions. The decline was largely driven by weak domestic and export demand, particularly from key European markets like Germany, France, and Italy.
Looking forward, the PIE predicts that Poland’s GDP growth in 2024 will reach 2.6%, European Commission expects a rebound to 2.8% and The World Bank - 3%. Economic growth in 2024 will be driven by robust private and public consumption. However, the trade balance is forecasted to limit growth. Investments are set to positively impact the economy in 2024 — less than in 2023, but with acceleration anticipated in 2025.
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