Polish economy likely to record weak growth again in Q4, says Danske Bank

In the last few quarters, the Polish economy has significantly decelerated, as suggested by the recent economic indicators. In the September quarter, real GDP expanded just 2.5 percent year-on-year, mainly because of a contraction in construction activity because of low absorption of EU funds, whereas low unemployment and a new child benefit payment underpin private consumption growth.

Short-term indicators indicate towards a weak growth in the fourth quarter as well, noted Danske Bank in a research report. Industrial output had decelerated to 1.5 percent year-on-year in November, although private consumption appears to be quite well as retail sales expanded 3.7 percent in November and consumer sentiment continues to remain at a record level.

Given that the Polish economy has performed weakly in 2016, the real GDP is anticipated to expand 2.5 percent, as compared with the earlier estimate of 3 percent, according to Danske Bank. Even if the Polish economy is expected to strengthen next year, the GDP is expected to grow just 2.9 percent as compared with the earlier projection of 3.7 percent, because of greater absorption of EU funds and stronger private consumption.

Meanwhile, Standard &Poor’s upgraded its outlook to stable from negative, while confirming its ‘BBB+’ rating. The rationale for the outlook upgrade was waning the near term risks to Poland’s key institutions, markedly central bank independence, while the budgetary position is also quite well in spite of weaker-than-expected growth because of government attempts to strengthen tax compliance, added Danske Bank.