Poland suffered its biggest contraction in investment for more than six years in the third quarter, data showed on Wednesday, as reduced inflows of European Union aid and political uncertainty discouraged firms from spending. Despite the drop in investment, the data confirmed that the economy had grown by 2.5 percent year-on-year thanks to a 3.9 annual rise in household consumption supported by a generous child benefit programme launched in April. The Polish economy grew by 3.1 percent in the second quarter.
A breakdown of third-quarter growth published for the first time on Wednesday showed total consumption added 3.1 percentage points to the annual growth rate. Investment subtracted 1.4 percentage points and foreign trade shaved off a further 0.3 percentage points, while inventories added a 1.1 percentage point.
Investment fell by 7.7 percent on an annual basis - its largest decline since the start of 2010, versus a 5 percent decline in the previous quarter, the data showed. The decline will disappoint Poland's ruling conservative, eurosceptic Law and Justice Party (PiS), which promised in last year's parliamentary election campaign to boost investment and push economic growth towards 5 percent. "Companies are withholding investment due to the surrounding uncertainty, both domestic and external," said Monika Kurtek, chief economist at Bank Pocztowy.
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