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Weaker private consumption a major factor in economy’s sharp slowdown in Q3


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
Construction Market Analyst, PMR

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