May 30, 2018 / 9:23 AM / a year ago

UPDATE 1-Rising consumption, inventories drive Poland's GDP growth above 5 pct

    * Polish Q1 GDP growth revised up to 5.2 pct y/y
    * GDP driven by rise in consumption, inventories
    * Slowing foreign trade weighs
    * Economists expect growth to slow
    * Consumption supported by record low unemployment

 (Adds details, quotes)
    By Marcin Goettig and Anna Koper
    WARSAW, May 30 (Reuters) - Robust consumption together with
rising inventories helped propel Poland's economic growth to
more than 5 percent in the first quarter, data showed on
Wednesday, but weaker foreign trade signalled the expansion
could slow in the future.
    Growth accelerated to 5.2 percent year-on-year, above an
earlier estimate of 5.1 percent. That compared with 4.9 percent
GDP growth in the three months to December 2017.
    A new breakdown showed consumption added 3.6 percentage
points to the first-quarter growth rate, a rise in inventories
added 1.9 percentage points, investment added 0.9 point, while
foreign trade subtracted 1.2 percentage points.
    "The data show that economic growth has peaked at the start
of this year," said Grzegorz Maliszewski, chief economist at the
Warsaw-based Bank Millennium. 
    Investment, seen by analysts as crucial to the growth
outlook, accelerated by 8.1 percent year-on-year from 5.4
percent in the previous quarter.
    "The pick-up in investment was caused by infrastructure
investment co-financed from EU funds," Malaises said, adding
that private investment remained weak.
    Poland is the largest recipient of EU cohesion funds and
some analysts have said the Polish government's well publicised
conflicts with the EU and policies to raise tax collection might
be discouraging firms from investing more.
    The European Commission presented earlier this week
proposals to cut the value of EU aid to Poland and other
post-communist EU members in the next long-term budget starting
in 2021.             
    Polish household consumption rose by 4.8 percent
year-on-year, supported by a record low level of unemployment
and fast wage growth.
    Economists said the data, together with the lower than
expected May inflation, added to arguments that interest rates
would not be changed in the coming quarters.
    "One should expect that the Monetary Policy Council will
maintain the outlook for a long stabilisation of interest rates
in Poland," said Monica Kurt, chief economist at Bank Pocztowy.
    In seasonally adjusted terms, the economy grew by 1.6
percent year-on-year in the first quarter, accelerating from 1.0
percent a quarter earlier.

 (Reporting by Anna Koper and Marcin Goettig; Additional
reporting by Pawel Sobczak, writing by Marcin Goettig; Editing
by Toby Chopra)
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