Poland: Growth falls to three-year low growth in Q4 2019 amid destocking and weaker consumer spending
In the final quarter of last year, the economy grew 3.2% year-on-year in unadjusted terms, according to a second estimate released by Poland’s Statistical Institute (GUS). The fourth-quarter print came in slightly above the preliminary estimate of a 3.1% increase, although it was down from Q3’s 3.9% expansion and marked the softest print since Q4 2016. On a quarter-on-quarter basis, growth slumped to a revised 0.3% in seasonally-adjusted terms (previously reported: +0.2% quarter-on-quarter seasonally-adjusted) after rising 1.2% in Q3. Moreover, the fourth quarter’s result brought full-year growth for 2019 to 4.1%, down from the 5.2% expansion clocked in 2018.
Unadjusted year-on-year figures show domestic demand weakened markedly in the quarter. Particularly, household spending eased (Q4: +3.3% year-on-year; Q3: +3.9% yoy), on cooling wage growth and an uptick in the unemployment rate, while government spending lost pace following October’s parliamentary elections (Q4: +3.1% yoy; Q3: +4.7% yoy). Moreover, destocking subtracted 1.3 percentage points from growth, more severely than Q3’s 0.7 percentage-point subtraction as companies opted to lighten their warehouses amid weaker demand prospects. On the other hand, fixed investment strengthened (Q4: +4.9% yoy; Q3: +4.7% yoy), supported by robust EU investment inflows.
On the external front, net exports contributed 1.1 percentage points to growth, up from Q3’s 0.8 percentage-point contribution. Export growth dived to 1.4% (Q3: +5.0% yoy) amid weak demand from the EU, while imports contracted 0.7% on cooling domestic demand after growing 3.9% in Q3.
Growth is set to moderate further this year, as external uncertainties will restrain exports and weigh on investment activity. That said, the economy should continue to expand solidly, boosted by resilient household spending amid the tight labor market, tax cuts, higher pensions and wage hikes. Weakness in the EU and potential disruptions to global supply chain cloud the outlook.