Polish economy likely to feature sub-3 pct growth in Q3, says Commerzbank

Recent economic data released in Poland had already implied that the GDP growth is slowing at a rapid pace and the third quarter is expected to show a sub-3 percent growth print, according to Commerzbank. Last week, the consumer confidence report showed that the sentiment dropped sharply in October by six points, falling back into the contraction territory after rising into expansion territory in the previous three months.

The economic climate index dropped 6.6 points to a seven month low. According to a local media, this may or may not be due to the protests against the government on the abortion issue. However, this seems highly unlikely. There has been a widespread slowdown in manufacturing and banking sector activity that is hurting economic sentiment, stated Commerzbank. Drop in fixed investment indicators is also adding to the drop in sentiment.

However, there is no link with near-term political disruptions. The rebound in economic confidence indicators in  the earlier three months was mainly due to unrealistic expectations from the Family 500+ subsidy program that are now waning. There are downside risks to the sub-consensus projection of 3.2 percent economic growth for 2016, added Commerzbank.

“We expect EUR/PLN to rise to around 4.35 in coming months”, noted Commerzbank.