Polish GDP expanded a seasonally adjusted 9.1% y/y in the first quarter, picking up from a gain of 8% y/y in the preceding three months, the Central Statistical Office (GUS) said in a flash estimate on May 17.

Robust growth is still the ripple effect of very solid activity in the second half of 2021 and puts Polish economy on a path to an expansion of even 5% in the entire 2022, analysts say. 

The incoming high-frequency macro data for April – specifically industrial production, retail sales, and construction, all due this and next week – will provide a clearer picture of the war’s impact on the economy in Q2.

That said, growth in Q1 comes in slightly below consensus, likely owing to a slowdown in investment demand, which soured in response to Russia’s aggression on Ukraine in late February.

Consumption growth likely eased as well, PKO BP notes, as the inflation shock could have moved demand to goods at the expense of companies offering services, accommodation, restaurants, and entertainment in particular.

Still, there is little doubt that the effects of the war in Ukraine will bite eventually, as high inflation dampens spending and export sectors soften, Capital Economics note.

A large contraction is unlikely in Poland, however. “The upside risks to our GDP growth forecasts in [Poland] have increased,” Capital Economics said.

Continued robust growth concurrent to a tight labour market and high inflation means that the National Bank of Poland is far from ending its tightening cycle. 

After raising its reference interest rate from 0.1% to 5.25 between October and May, more hikes are widely expected, taking the interest rate up to 7% this year. That, in turn, will facilitate GDP growth easing in the second half of the year but it appears unlikely that the slowdown will be huge.

GUS’ flash estimates do not provide a detailed breakdown of growth drivers. Those are due on May 31.

In unadjusted terms, Poland’s GDP expanded 8.5% y/y in Q1 versus a gain of 7.6% y/y in October-December, GUS data also showed. 

In q/q terms, GDP grew an adjusted 2.4% in Q1 following a gain of 1.8% q/q in the fourth quarter.

Last year, Poland's GDP grew 5.9% after contracting 2.7% in 2020 in the wake of the pandemic.