Polish GDP contracted 1.3% y/y in the second quarter, (chart) after no change y/y in the preceding three months, seasonally adjusted data from the Central Statistical Office (GUS) showed in a flash estimate on August 16.
 
The fall is a negative surprise after the flat Q1 reading suggested the Polish economy passed the worst of the downturn, analysts say. An economic turnaround is only expected in the coming two quarters and it will not be fast, Bank Millennium now said in a comment on the GUS figures.
  
“High-frequency data and economic sentiment surveys suggest that the economy is moving past the trough of the economic cycle and the second half of this year will bring a gradual recovery in economic growth,” Bank Millennium said.

"The process will be slow due to weak growth in Poland’s main trading partners,” it added.
 
Adjusted quarterly growth showed a sharp slowdown, as GDP fell 3.7% in the second quarter – a changeover from a gain of 3.8% q/q in January-March.
 
Unadjusted, GDP declined 0.5% y/y in Q2 after sliding 0.3% y/y in the preceding three months. 

Data suggest that a fall in private consumption once again underpinned the weakness of the headline figure, PKO BP said in a comment.
 
“Continued strong growth in investments and net exports counteracted a deeper decline,” PKO BPO added.

A detailed breakdown of GDP data will be published at the end of August.

Analysts are again slightly more cautious about the perspectives of economic recovery in 2023 than after the publication of Q1 figures in May.

“Slightly weaker than expected results for Q2 … increases the risk of lower growth this year than our current forecast of 0.9%,” Bank Millennium said.

“We believe that economic growth will accelerate in H2 2023, supported by a decline in inflation and the abatement of last year’s high base effect. We maintain our ‘soft landing’ scenario of the Polish economy,” Credit Agricole said.

Unlike after Q1 figures, analysts now say that new data – alongside other data such as easing inflation – support the scenario in which the National Bank of Poland cuts interest rates by a total of 50bp by the end of 2023.

The NBP’s reference interest rate is currently at 6.75%, a 20-year high.