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GDP growth slows to 1.4% y-o-y in Q3


Poland’s gross domestic product amounted to just under PLN 392.1bn (approx. €94.8bn) in the third quarter of 2012, which in real terms translates into an increase of 1.4% compared with the same period a year ago, according to a preliminary estimate from the Central Statistical Office (GUS). The result is below a market consensus of 1.7% y-o-y and compares to 2.3% y-o-y growth in Q2.

The main factor behind the deceleration of GDP growth in Q3 was a significant weakening of domestic demand, which contracted by 0.7% y-o-y (compared with a decrease of 0.4% y-o-y in Q2). This was due to weak gross capital formation, which made a negative contribution of 0.8 p.p. to GDP growth for the quarter. The contribution from consumption was slightly positive at 0.1 p.p., thanks to marginal rise in private consumption and with a neutral contribution from public consumption.

At the same time, the contribution of net exports remained positive at 2.1 p.p., reflecting a combination of a significant fall in imports and a minimal increase in exports.

In the first three quarters of 2012, the Polish economy expanded by 2.4% y-o-y.

GDP and its components changes in Poland (%, y-o-y), Q1 2009-Q3 2012

The GDP growth figure for Q3, which came in significantly below consensus forecasts, provides confirmation that economic activity in Poland is decelerating at a rapid pace, even though seasonally-adjusted data are not as bad as the raw data. While the observed softening of gross fixed capital formation and decline in inventories were as expected, the extent of the slowdown in private consumption came as a major negative surprise. At present the sole remaining engine of economic growth in Poland are net exports, tough it should be noted that their positive contribution stems in part from lower imports (a consequence of flagging domestic demand), and not exclusively from continued solid demand for Polish products on export markets. Such a composition creates a considerable risk for GDP growth in the quarters ahead, particularly if the eurozone sinks into a deeper recession, as seems possible. (Until now resilient private consumption provided Poland with an effective cushion against weak external economic conditions.) And while the strong international competitiveness of Polish products is likely to soften the impact of deteriorating global demand to some extent, we should keep in mind that the exchange rate of the zloty is currently much less favourable for Polish exporters than it was during the previous downturn. Therefore we forecast that GDP growth in Poland will slow down below 1% y-o-y in the final quarter of this year, and that it will remain marginally positive in Q1 2013 as well.

Paweł Sionko
Senior Economist, PMR

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