Snapshot: Poland’s economy remains resilient as Q1 GDP sees only minor contraction.

Poland’s first quarter GDP contracted by 0.2% year-on-year, which surpassed market expectations of -0.8%, as well as ING’s forecast of -1.5%. However, it is important to note that the year-on-year decline is primarily due to the strong baseline of 4.4% q/q (SA) growth in the first quarter of 2022. The structure of GDP is currently unknown and will not be revealed until May 31st. Nonetheless, the decline in GDP is most likely due to a decrease in household consumption, following a 1.1% year-on-year decline in Q4 2022.

On the other hand, foreign trade played a vital role in supporting Poland’s GDP during the first quarter of this year. Real export rates increased while import rates decreased, taking into account the contraction in domestic demand. While there are still a multitude of risks ahead, such as a “credit bomb” crisis in the US and Europe, it is predicted that Poland’s GDP will grow by 1% y/y (1.5-1.5% q/q) in 2023.

To ensure a progressively upward trend in GDP, it is suggested that there are further reductions in inflation and a recovery in consumer purchasing power. This will be crucial in reigniting spending, contributing positively to net exports and building GDP momentum through 2023. Although the situation abroad remains uncertain, it is expected that a more pronounced recovery will be evident in Q4 of this year.

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