Polish economic growth likely decelerated in Q1, to contract in 2020

The Polish first quarter GDP growth data is set to be released this week. According to an Erste Group research report, the flash estimate is expected to show that the economic growth decelerated to 1.2 percent year-on-year in the first quarter on the containment measures imposed in mid-March.

The robust beginning to 2020 (January and February) might possibly compensate for some of the negative effects of COVID 19 on GDP growth in the first quarter. Nevertheless, the negative effect of the lockdown has already been visible in the March data, as retail sales and industrial production growth both entered negative territory. The lockdown measures should translate into lower economic growth in the first quarter of 2020 mainly due to lower private consumption.

“With persisting uncertainty and only a gradual easing of containment measures, we expect the economy to take the biggest hit in 2Q20, with GDP growth diving as much as 10 percent y/y. According to the Spring Economic Forecast, the EC expects the Polish economy to contract by -4.3 percent in 2020. For the time being, we stick to our FY20 growth forecast at -3.7 percent, but see risks to the downside”, added Erste Group Research.