Polish GDP expanded 1.7% year on year in the fourth quarter, (chart) picking up versus a gain of 0.3% y/y in the preceding three months, seasonally adjusted data from the Central Statistical Office (GUS) showed in a flash estimate on February 14.

The expansion signals an economic recovery gathering pace, albeit along a bumpy trajectory. The somewhat disappointing reading for Q4 primarily owes to weak consumption – dented by inflation and the resulting weakness of real wages’ growth, analysts say.

Adjusted quarterly figure flatlined following a gain of 1.1% quarter on quarter in July-September, GUS data also showed. Unadjusted, GDP growth picked up to 1% y/y in Q4 after an expansion of 0.5% y/y the preceding quarter. A detailed breakdown of GDP data will be published at the end of February.

Analysts say that 2024 will deliver a much sharper recovery.

“In the coming quarters, the acceleration of real wage dynamics, resulting from strong growth in nominal wages and a decrease in inflation will bring about increasingly robust consumption growth,” PKO BP said in a comment. 

Along with the continued growth in investment, “we expect GDP growth to accelerate to 3.7% this year from 0.2% recorded in 2023,” PKO BP said.

The GDP data for Q4 align with the November macroeconomic projection from the National Bank of Poland (NBP) and should not alter the recently communicated monetary policy strategy, analysts say.

“Currently, we only anticipate one interest rate cut towards the end of the year while seeing downside risks to this forecast primarily due to the negative impact of slower return of demand from key trading partners,” Bank Millennium said.

The NBP’s reference interest rate is currently at 5.75% after a combined reduction of 100bp in September and October.