BANK MILLENNIUM S.A.

MIL
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Bank Millennium S A : Poland's GDP growth adjusted upward to 11% y/y in Q2

09/01/2021 | 04:21am

Polish GDP jumped a seasonally adjusted 11% y/y in the second quarter after retreating 1.3% y/y in January-March, Poland’s statistics office GUS said in a preliminary reading on August 31.

The reading is an upward revision of 0.3pp versus the flash estimate published in mid-August. The all-time high reading sees off Poland’s COVID-19 (coronavirus) induced recession for good, driven by accelerating household consumption and investment, mainly by small and medium-sized companies.

That said, the steep gain was predictable, as measured against the recession’s worst point a year earlier. It now sets Poland on track for dynamic full-year GDP growth in 2021 overall, analysts say, predicting an expansion of over 5%.

“We revise our 2021 growth forecast up by 0.5pp to 5.3%,” Erste said in a comment on the GUS figures. Bank Millennium expects 5.3% as well, while the state-controlled PKO BP predicts a surge of 5.4% or more.

Major components of economic growth recorded steep y/y expansion in the second quarter, the breakdown of the data shows. Household consumption grew an unadjusted 13.3% y/y in the first quarter, GUS data show. That is a major pick up from a gain of just 0.2% y/y in Q1.

Investment also accelerated growth, adding 5% y/y in the second quarter after growing 1.3% y/y in January-March.

“Among medium and large companies, investment is growing dynamically, supported by a very good financial situation of enterprises. Investment financed from the central budget and by local government is falling, which is partly related to the transitional period between the old and the new budget perspective,” Bank Millennium said.

Overall, domestic demand expanded 12.8% y/y versus a gain of 1% y/y in the first quarter, GUS said.

In unadjusted terms, Poland’s GDP expanded 11.1% y/y in Q2 versus a fall of 0.9% y/y the preceding quarter, GUS data also showed. GUS thus adjusted the reading upward by 0.2pp.

In quarterly terms, economic growth grew an adjusted 2.1% in April-June (flash: +1.9% q/q) after a gain of 1.3% q/q in the first quarter. There was no unadjusted q/q reading.

Poland’s GDP contracted 2.7% in 2020 in one of the shallowest recessions in Europe, although one that took place amidst one of the continent’s highest ratios of excess deaths caused by the coronavirus pandemic.