MACROscope

Poland’s four-percent GDP growth in 2019 still looks like a decent result (being probably among top-five in the EU), but in fact it implies that in the final quarter of the year the economy slowed much more than anticipated. GDP growth could have been in a range 2.8-3.1% y/y in 4Q19, assuming no major revisions of the previous quarters. Surprisingly, the data suggests the worsening came in private consumption and net exports, unlike what we had expected. Meanwhile investments accelerated at the end of the year, it seems (...) For now, we see a clear downward risk for our 1Q20 forecast, especially after higher global risks related to the outbreak of the coronavirus. (...)

Poland is lagging the developed Europe in this economic cycle. The slowdown, which started quite late, may not end before the end of 2020. We see chances for a gradual improvement of business activity in Germany and the euro zone in the second half of the year, but we may have to wait until 2021 before we see a visible pickup in Polish GDP growth, due to domestic demand inertia (sluggish investments) and base effects (expiring boost for consumption from the pre-election fiscal package). According to our forecast, GDP growth will slow to almost 3% in 2020, from around 4% in 2019 and 5% in 2018.