Polish economy likely to expand 4.2 pct in 2018

Polish economic growth peaked in the fourth quarter of 2017, reaching 5.1 percent year-on-year. Domestic demand, which grew 6.1 percent, mainly drove the headline growth, especially the visible rebound of investment, which expanded 11.3 percent year-on-year, implying a good year ahead.

Even if the start of the year was strong, with industry and retail sales growth above 8 percent year-on-year in January, slightly lower GDP growth dynamics is likely in the first quarter of 2018 and the quarters to come compared to fourth quarter of 2017.

The PMI index appears to have peaked, as recent months indicated a soothing of market sentiment, while retail sales growth dynamics continue to be in a sideways trend.

“The update of our now-casting model suggests that GPD growth might decelerate in 1Q18, as it is tracking the growth dynamics above 4.5 percent. This year, we expect the economy to expand 4.2 percent. Thus, in the following quarters, annual GDP growth is expected at between 4.0 percent and 4.5 percent”, added Erste Group Research.

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