Poland's economy grows at fastest pace in five years in Q3

Poland's economy expanded at its fastest pace in more than five years in the third quarter, data showed on Tuesday, signalling investment has finally rebounded and joined consumption in driving growth. Gross domestic product (GDP) grew by 4.7 percent year on year, the fastest since the end of 2011, a first estimate from the statistics office showed. Analysts polled by Reuters expected growth at 4.5 percent year.
"Consumption has sustained its large contribution into GDP growth thanks to high wage dynamics and the budget stimulus," said Rafal Benecki, chief economist at the ING Bank Slaski. "A new element that is helping GDP is investment," he said, adding that capital expenditure growth likely picked up to about 5 percent year-on-year in the three months to September. The statistics office will present a detailed breakdown of growth on November 30.
Investment in Poland declined throughout last year, partly due to lower inflows of European Union aid. But double-digit growth in construction output in the last few months had signalled a turnaround. Critics of the right-wing Law and Justice (PiS) party government, which came to power in late 2015, had said the fall in investment was partly due to a greater unpredictability in domestic policy-setting.
The PiS launched a child benefit programme in the first half of 2016 worth about 1 percent of GDP and passed legislation to reduce the retirement age starting from October 2017, but it has improved tax collection as well. Unemployment has fallen to 6.6 percent, an estimate showed last week, its lowest level since Poland's transition from communism in the early 1990s.
Poland's central budget posted its biggest surplus of the last quarter century in the first nine months of 2017 thanks to, among other things, double-digit growth in value added tax revenue. Analysts polled by Reuters expect economic growth to pick up to 4.1 percent in 2017 from 2.7 percent in 2016. The statistics office said that in the July-September period seasonally-adjusted GDP grew by 1.1 percent quarter-on-quarter compared with a revised 0.9 percent expansion in the three months to June.