Polish economy likely to expand 3.1 pct this year, 3.2 pct in 2017

In the past quarter, Polish economic indicators have become weak; however, they continue to remain stable. The PMI has dropped towards 51 from about 54 in the first quarter. Also, uncertainty about the demand from foreign trading partners such as Russia and China continue. A subconsensus view is held by the Commerzbank regarding the German and euro zone economies for 2016-2017.

The second quarter GDP data underlined concerning softening in growth dynamics. Even if the economic growth recovered modestly following a decline in the first quarter, the first half as a whole has registered below 3 percent annualized growth, while fixed investment growth has now recorded a series of declines that cannot be explained by a pause in the EU funds, said Commerzbank in a research note. Given the second quarter data, the official growth outlook is expected to be downgraded.

The second quarter print has raised questions regarding how much boost the Family 500+ subsidy can provide.

“The data support our sub-consensus 3.1 percent growth forecast for this year and a similar 3.2 percent next year”, added Commerzbank.

There are certain upside risks to the projections only in a situation where the ECB might turn around the euro area manufacturing cycle significantly in the quarters ahead.