Healthy economic growth in Poland

In Q3 2017 Polish GDP grew by 4.7% y/y while GDP adjusted seasonally against last quarter grew by 1.1% - the Central Statistical Office (GUS) announced during its presentation of brief GDP estimate.

Comment by Dr. Małgorzata Starczewska-Krzysztoszek, chief economist of the Lewiatan Confederation

The economic growth in Poland is fine. The question remains whether the whole economy is also fine; whether the structure of GDP growth gives the opportunity for subsequent development, for keeping the dynamics of GDP at the level of at least 4 per cent in the next quarters and years. We are excited with the high rate of economic growth. However, it is not the dynamics, but the structure of economic growth that provides the answer. From the point of view of economic growth, in the mid and long term perspective the important thing is whether we invest or not, rather than how much we consumed.

What may be said about the growth of the Polish economy in Q3 2017 without the data on the structure of GDP growth is that it was comparable with the one in the two last quarters of 2017. This fact has been proven with the data adjusted seasonally per quarter. In Q1 GDP grew by 1.1% q/q, in Q2 it went up by 0.9% while in Q3 - it rose again by 1.1%

Thus, the quarterly data show that in Q3 we surely took advantage of the low base effect and the GDP growth by 4.7% y/y is for sure a statistical effect to some extent. To what extent it is the result of the economy acceleration and this acceleration being of development nature - we will find out at the end of November when the Central Statistical Office is going to publish the comprehensive data pertaining to the GDP growth.

Everything, however, seems to prove that similarly to the previous quarters it was the consumption (both individual and public) that built the economic growth. The foreign turnover data show that in Q3 2017 also net export supported the growth of GDP (after the strong negative impact in Q2 2017 when the net export decreased GDP by 1.5%).

Let's hope that investments have contributed to this, too. And even more significantly than during the H1 2017 when they grew merely by 0.3% (after the drop in 2016 by almost 8%) adding thereby 0.1 p.p. to GDP growth. I would rather avoid great optimism when it comes to public investment. It's hard to be the optimist when we see how subsequent tenders for the performance of the investments founded with public monies (both EU and domestic) turn into a fiasco due to the lack of quotations from potential contractors. But the information coming from enterprises prove that their willingness to invest keeps on growing. If we notice that in the data delivered by the Central Statistical Office about the 50+ enterprises which will additionally show that business entities invest in machines and devices more than on average, then we will have the reasons to be optimistic. This will be the proof that business entities start to see some solutions other than staff solicitation and increasing salaries that do not correspond with higher efficiency at work, paving them the way to development.

What our economy needs is the investment. Without it we will not satisfy the consumption demand resulting from the growth in employment and take-home income, we will not be capable of keeping the dynamics of export at today's level. What is more, we will weaken the chances of the Polish economy for development in the next years.


Małgorzata Starczewska-Krzysztoszek