Domestic demand likely to drive Polish economy in 2018

The Polish economic growth is expected to be mainly driven by domestic demand next year, which in turn is likely to be stimulated by private consumption, noted Erste Group Research. Even if the tight labor market underpins a high level of household spending, lower dynamics of private consumption growth is expected, falling to 4.2 percent, mainly because of waning positive effects of the 500+ program.

In spite of the expected growth of the nominal wage, real wage growth is unlikely to accelerate more visibly, because of increasing inflation, restricting additional acceleration of retail sales growth. Investment is likely to accelerate eventually next year and is expected to grow 6.7 percent.

Stronger growth has been seen in the third quarter, with investment rising 3.3 percent year-on-year. The main reason behind the rising investment activity would be higher drawing of EU funds, as EU payments have risen. Furthermore, over one third of total EU funds have already been allocated to selected projects.

Moreover, a rise in construction output and new industrial orders has been seen. Overall, the positive contribution of investment to GDP growth gradually rise, at the expense of a slightly lower private consumption contribution.

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest