Poland: GDP growth slows in Q3
Economy decelerates but is among the EU’s top performers: According to a flash estimate, the economy lost steam in Q3, as markets had expected: GDP growth waned to 2.7% year on year from 3.2% in Q2. That said, the expansion exceeded the EU average of 0.9% and was among the quickest in the Union overall. On a seasonally adjusted quarter-on-quarter basis, economic activity fell 0.2% in Q3, contrasting the previous quarter’s 1.2% increase and marking the sharpest downturn since Q2 2023.
Sluggish domestic and external demand likely behind moderation: A full breakdown is not yet available, but the annual moderation likely stemmed partly from sluggish domestic demand: Retail sales and industrial activity grew at weaker rates in the quarter, while the construction sector remained in contraction. Additionally, private spending was likely downbeat, as inflation averaged above Q2 levels in Q3 and nominal wage growth slowed from the prior period. Elevated interest rates likely also capped investment. Meanwhile, a deteriorating trade balance in the quarter suggests net exports weakened.
A full breakdown will be released on 28 November.
Stronger GDP growth expected ahead: Looking ahead, GDP growth is likely to outpace Q3’s reading in Q4 and should strengthen further into 2025. In turn, the economy will accelerate from 2024’s projection next year as a whole, chiefly thanks to rising growth in fixed investment and exports. Less positively, private and public spending are set to lose steam from this year’s forecasts. Downside risks include prolonged weakness in EU demand, particularly from Germany’s industrial sector, amid rising U.S. tariffs under Trump.
Panelist insight: ING’s Rafal Benecki and Adam Antoniak commented on the outlook:
“Polish consumer purchasing activity also slowed in the second half of 2024. In 2025, we expect consumption growth to remain similar to the second half of 2024, but project a clear rebound in investments, as EU funds finally start flowing into the economy. […] At the same time, structural funds absorption should improve as well. We forecast that economic growth will accelerate to 3.5% in 2025. Poland has domestic growth drivers that allow it to resist stagnation in the eurozone and the risks posed by Trump’s protectionist policies.”