WARSAW: Poland's gross domestic product (GDP) growth slowed to 3.0 percent year-on-year in the first quarter of 2016 to its lowest in more than two years as public investments slowed pending fresh EU funds, a flash estimate showed on Friday.
Analysts polled by Reuters expected the economy to have grown by 3.4 percent year-on-year in the first quarter after it expanded by 4.3 percent in the previous quarter.
The statistics office also said that in the January-March period Poland's seasonally adjusted GDP fell by 0.1 percent quarter-on-quarter for the first time in years, compared to a revised 1.3 percent growth a quarter earlier.
"The weakening of growth pace in the first quarter is a result of the EU's financial perspective coming to an end, which translates into significantly smaller investment activity," said Urszula Krynska, an economist with Bank Millennium in Warsaw.
"But clearly the weakening in investments has spilled across the whole economy." In the last quarter of 2015 Poland, a major beneficiary of European Union funds, accelerated its take-up of the EU funds as it was the last opportunity to draw on cash from the 2007-2013 EU perspective.
This year, Poland was not ready yet to significantly benefit from the new financial aid.
However, analysts expect subsequent quarters to show an improvement in growth for Poland, the largest economy in ex-communist central Europe, due to a new child benefit scheme, which will stimulate consumption, and fresh EU money.
The zloty currency did not react to the GDP data as investors' main concern now is an expected negative decision by Moody's Investors Service on Poland's rating, which is expected to be published on Friday evening.
But Polish bond yields fell by 2-3 basis points in anticipation that the central bank will be more willing to cut interest rates, dealers said.
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