Local Analysts React To Strong Q1 GDP Data

Flash Q1 GDP data exceeded expectations, with local analysts suggesting that the outturn was boosted by services and exports, which helped counter the impact of weak consumption.

• The GDP outturn for Q1 was "brilliant," according to mBank's research desk, as the annual contraction was "merely" by 0.2%, while we saw "fireworks" in the seasonally adjusted figure (+3.9% Q/Q). They note that the technical recession is over and "the economy is entering the expansionary phase, which is confirmed by activity indicators." The upside risks to their +0.3% Y/Y projection for 2023 have been strengthening and have now materialised. They stress that the NBP's macroeconomic projections already underestimate wages and GDP growth, which raises the risk of a delay in returning inflation to the target.
• PKO analysts tweet that the Q1 outcome was better than expected, but falls in line with a scenario of slowing annual pace of growth, mainly due to cooling consumption. Their economist told PAP newswire that they still expect FY2023 GDP growth to be "near zero, slightly above zero."
  
• Pekao tweet that in their view economic growth was boosted by strong performance from services and exports, as they tip hat to a "mega growth" on a quarterly basis. Replying to mBank's post, they note that there was no technical recession in Poland.
  
• ING note that Poland is "resisting recession" due to strong exports, even as domestic demand is weak. They expect 2023 GDP growth to be above +0.5% Y/Y.
  
• The Polish Economic Institute write that the contraction of 0.2% Y/Y is the lowest outturn and economic activity will recover from here. Annual GDP growth may flatline in Q2 but weak consumption will provide a barrier to stronger recovery. They expect to see stable growth in 2H2023, likely approaching +1.5% Y/Y.