PL: Polish economy slows down in the third quarter

The flash estimate for GDP growth in the third quarter has just been released, indicating a year-on-year increase of 2.7% (NSA, previous years prices). This figure falls short of the market consensus of 2.9%. Our own expectations were even more conservative, as we anticipated a more pronounced moderation in growth at 2.5%. In seasonally adjusted terms, the quarter-on-quarter growth was -0.2%, for us a negative surprise. Our forecast for 2024 remains at 3%, although we acknowledge a more pronounced downside risks at this time.

In contrast to the second quarter, which recorded a growth rate of 3.2%, we are observing a deceleration in growth momentum in Poland. Monthly indicators had already hinted at this outcome, with real-term retail sales averaging only 1.3% y/y growth in Q3, while in September declining by -3% in annual terms. Similarly, the industrial sector faced challenges, achieving an average growth rate of 1.2% y/y in Q3, with both August and September showing contraction. The negative quarterly growth was unexpected, and we attribute this primarily to consumption trends. Additionally, investments and public expenditure may have also slowed, particularly following the positively surprising results from Q2. It is important to note that seasonally adjusted time series with constant prices (based on 2020 or 2015) can be volatile and subject to revisions. Looking ahead, we anticipate a return to positive quarterly growth in the upcoming quarters, albeit at a sluggish pace. Investments are expected to be the primary driver of growth, supported by a moderate revival in consumption, especially if inflation does not exceed expectations. A detailed breakdown of third-quarter growth will be available on November 28.