Revival of the Polish economy: GDP in Q2 2024
In the second quarter of 2024, the Polish economy experienced significant acceleration. According to preliminary data from the Central Statistical Office (GUS), Gross Domestic Product (GDP) grew by 3.2% compared to the same period last year, surpassing analysts’ forecasts of 2.7-2.8%. This is notable as growth in the first quarter was just 2%.
Drivers of growth
The primary driver behind this surprising result was strong household consumption, which accelerated again. Analysts note that individual consumption, including services, played a key role in boosting GDP. Loose fiscal policy and a stable labour market supported wage growth, which, combined with declining inflation, led to an increase in real income dynamics, fuelling consumption.
However, investments in Poland remain on a low level, which is one of the main obstacles for any further dynamic growth. Despite this, the contribution of inventories to GDP growth improved, and net exports remained positive. All these factors indicate a gradual improvement in the country’s economic situation.
Inflation and monetary policy outlook
The economic growth in Q2 2024 coincided with rising inflation. In July, the consumer price index (CPI) increased by 4.2% year-over-year, with goods and services prices rising by 3.5% and 6%, respectively. The most significant price increases were seen in electricity, gas, and water costs, which significantly impacted the overall price level.
The rise in energy prices also exerted pressure on core inflation, complicating the prospects for interest rate cuts by the Monetary Policy Council (RPP). Despite positive economic signals, it is anticipated that the RPP may decide to keep interest rates unchanged in the near future. These decisions will depend not only on the further development of inflation but also on economic performance in the coming quarters.
Preliminary nature of the data
It is important to note that these data are preliminary and may be subject to revision. According to the revision policy applied in quarterly national accounts, the full GDP data for the second quarter of 2024 will be published on August 29th, 2024.
Conclusions and future outlook
Economists predict that this year’s economic growth will reach around 3%, which is a good result compared to the previous, difficult year. However, there are concerns that the third and fourth quarters may bring slightly weaker results, especially in light of uncertain international conditions, particularly in Western Europe and China. Nonetheless, the outlook for 2025 is optimistic, with potential further GDP growth driven by investment revival and improving market conditions abroad.
In summary, despite the challenges and risks associated with rising inflation and economic uncertainty on the international stage, the Polish economy is showing signs of solid recovery, supporting hope for stable development in the coming years.
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