Poland's economy grew 4.3 percent in the second quarter, a touch better than expected and far faster than most of its European peers, but analysts said it should ease back in the second half as neighbouring Germany slows. Polish gross domestic product for the April-June period, buoyed by resilient domestic demand and investment, exceeded an analysts' growth forecast of 4.2 percent and compared with 4.4 percent seen in the first quarter of 2011.
The zloty and bonds gained after the statistics office data on Tuesday. "The Polish economy remained strong in the second quarter, but we do not think this is very important given the dramatic deterioration in the economic outlook abroad, which is likely to have some adverse affects on Polish growth during the second half of the year," said Anders Svendsen, Nordea chief analyst. The data showed GDP grew 4.7 percent on an unadjusted quarter-by-quarter basis and by 1.1 percent on a seasonally adjusted basis, the same as in the first quarter.
The official figure confirmed an earlier Reuters report. Domestic demand was up 4.3 percent year-on-year in the second quarter, consumption rose 2.4 percent and investment by a robust 7.8 percent, up from 6.0 percent in the previous quarter. "Growth was primarily driven by domestic demand. The growth of outlays on fixed assets accelerated year-on-year. The data on investment is the only unequivocally bright spot in the data," said Tomasz Kaczor, chief economist at BGK Bank.
"But despite the good figures, second-quarter data is in some sense ancient history. Ahead of us is a marked slowdown in industry, declining retail sales dynamics and increasingly stronger signals that the second half of the year will look significantly worse." "We expect 3.4 percent growth in the second half of 2011 and 3.9 percent in the whole of 2011." Analysts said Tuesday's data would encourage the central bank's Monetary Policy Council (MPC) to leave interest rates on hold for the time being.
A bout of risk aversion in financial markets in August triggered by global growth worries, coupled with worsening data from Germany, Poland's main trade partner, had spurred market expectations of an early cut in Polish borrowing costs. "The MPC can forget about rate hikes for now, but it is too early to talk about rate cuts as the growth rate is still decent," said Kaczor.
"Even if growth in 2012 is slightly slower than in the second half, this is still decent growth." Reacting to Tuesday's data, MPC member Anna Zielinska-Glebocka said she saw no need to cut borrowing costs as inflation remains high and growth solid. She also said she saw growth for the whole of 2011 at above 4.0 percent.
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