PL: Consumption supported GDP in 2024

With todays release of the Q4 2024 GDP structure, we can now close the chapter on last years economic performance. The full year saw economic growth of 2.9%, positioning Poland among the fastest-growing economies in the EU. As expected, household consumption was the primary driver of growth, albeit slightly below forecasted levels. Additional momentum was provided by public expenditure, while investment rates exceeded expectations, and net exports subtracted from overall growth.

A closer look at the figures shows that household consumption rebounded in the last quarter of 2024, growing by 3.5% year-on-year and contributing approximately 1.8 percentage points to the final growth figure of 3.2% (NSA, previous years prices). Over the past year, household consumption increased by 3.2% year-on-year, slightly below our expectations due to a weak third quarter, when consumption grew by only 0.3% y/y as the country dealt with floods in the south. Public expenditure grew rapidly, particularly in the first half of 2024 (+10.5% y/y), but moderated in the second half (+3.8%). Nevertheless, the government contributed 1.3 percentage points to the overall growth figure in 2024, the highest contribution in several years. Investment growth was a positive surprise, as we had anticipated stagnation; however, overall growth in 2024 reached 1.6%, contributing 0.3pp. External conditions led to exports growing at a slower pace than imports (+1.2% vs. +3.3%), resulting in a negative contribution from net exports of -1 percentage point. Finally, inventories boosted GDP growth by 0.5 percentage points in 2024, primarily due to strong performance in the third and fourth quarters.

Looking ahead to this year, we expect household consumption to grow at a similar pace to last year, despite a slowdown in real wage growth. We believe that households, having rebuilt their savings in 2023 and 2024, will be able to offset slower wage increases by saving slightly less. Investments are expected to play a significantly larger role in 2025, as major projects financed by the RRF begin to materialize. The external environment remains weak, and net exports are likely to continue to be a drag on growth this year. Our overall forecast for 2025 GDP growth stands at 3.3%.