Poland’s economy is likely to have slowed down in the first quarter. It is expected to have grown 3% on a year-on-year basis in Q1 2016, as compared with Q4 2015’s 4.3% y/y growth, said Societe Generale in a research report. This will be consistent with the preliminary Q1 GDP figure that was released earlier this month. There is a major possibility that government investment and spending decelerated in Q1 2016 from Q4 2015. Inventories are also expected to have fallen.
The Polish economy is expected to rebound in the quarters to come, supported by upbeat trends in interest rates, labor market and deflation. Moreover, retail sales will benefit in the coming quarters with the help from the child subsidy program. On the downside, investment is likely to decelerate, while net exports are expected to be a drag on GDP in the coming quarters.
Meanwhile, deflation in Poland is expected to have narrowed to -1% y/y in May from -1.1% in April. On month-on-month basis, consumer prices are likely to have increased 0.1%, according to Societe Generale.
“We expect 0.2% mom growth in food prices and around 2.4% mom growth in transport prices (as fuel prices increased by 4.1% mom in May)”, noted Societe Generale.
