Domestic demand likely drove Polish economy in Q4 2018, growth likely to decelerate to 4 pct in Q1 2019

Polish fourth quarter economic growth data is set to release this week. The structure of the economic growth in general affirm that domestic demand was the pillar of growth in 2018, noted Erste Group Research in a report. Private consumption growth was strong and investment activity has rebounded. However, the structure of growth in the last quarter should hint at future development. Development of consumption growth will be especially interesting.

Stabilization of normal wage growth and decelerating employment growth, implies that private consumption is expected to lose some momentum in the coming quarters. Investment is likely to further benefit from EU fund utilization. However, domestic demand should continue to be the main driver of growth in 2019 and should remain a cushion for the negative impact of the slowing external environment.

“At this point, we expect the economy to slow in 1Q19 toward 4.0% y/y”, added Erste Group Research.