Decline in GDP in Poland in the second quarter of 2023

We have a decline in GDP in Poland: in the second quarter of 2023, the economy shrank by 0.5 percent. compared to the same period last year. These are the latest figures published by the Central Statistical Office.

GDP fell also on a quarterly basis

GDP in Poland fell not only on an annual basis, but also on a quarterly basis. According to preliminary data from the Central Statistical Office, the decrease compared to the first quarter amounted to as much as 3.7 percent.

Economists expected a slowdown in the economy, but not so strong. so-called In 2010, the market consensus indicated that Polish GDP would be in the red, and the decline would be around 0.2-0.3 percent every year.

Why did Poland’s GDP fall? Experts point out that private consumption is currently the main brake on the Polish economy. It is true that the preliminary data of the Central Statistical Office do not yet include a detailed breakdown of the gross domestic product into components, but this can be inferred from other information for example, retail sales data.

– (…) Based on high-frequency data, we expect a deepening decline in private consumption, which is negatively affected by high inflation and high interest rates. We also expect a slight slowdown in the case of investments in fixed assets, although their dynamics will remain positive, Bank Millennium economists wrote in their commentary before the GUS publication.

According to data from the Central Statistical Office, retail sales in June in constant prices were lower by 4.7 percent compared to June 2023. In May, the decline was 6.8 percent, while in April it was 7.3 percent.

Export is the driver of Poland’s economy

According to experts from Bank Millennium, the most important driver of the Polish economy is export at the moment. Is there a recession in Poland? Although GDP fell on an annual and quarterly basis, the situation in the Polish economy is not a recession. According to the textbook definition, GDP would have to fall for two quarters in a row to be considered a so-called fall technical recession.

Meanwhile, in the first quarter we had a decrease in the domestic product on an annual basis (by 0.3 per cent), but compared to the fourth quarter, the GDP increased by as much as 3.8 per cent.

It was the highest quarterly economic growth in OECD countries.  According to economists, the decline in GDP in the second quarter could have been a downturn this year. Bank Millennium believes that high-frequency data, as well as the results of business climate surveys, suggest that the second half of the year will bring growth recovery.

– This will be favored by a decrease in inflation and an increase in the purchasing power of household income, supporting consumption – wrote the bank’s economists in a commentary. Jakub Rybacki, an economist at the Polish Economic Institute, believes that the coming months will bring an improvement in economic activity.

And in the second half of the year, GDP growth should clearly exceed 1%. – The following quarters will bring a rebound in activity. The rate of wage growth is again higher than inflation. Under such conditions, consumer spending should grow. We estimate that GDP will grow by 0.7% in the whole year. i.e. slightly below the market consensus – estimates Jakub Rybacki.

Source: 300gospodarka and other Polish media.


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