Polish GDP Growth Tops Forecasts, Reducing Rate Cut Pressure
(Bloomberg) -- Poland’s economy grew faster than expected in the second quarter, reducing pressure on the central bank to quickly cut interest rates.
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Gross domestic product expanded 3.2% in the three months through June, compared with 2% in the first quarter, according to preliminary data published Wednesday. Analysts expected a 2.7% expansion, according to the median estimate from 21 economists surveyed by Bloomberg.
Eastern Europe’s biggest economy has only gradually picked up speed this year, hampered by malaise in neighboring Germany and other trading partners as well as high local interest rates. Unlike its regional peers, the Polish central bank has refrained from lowering borrowing costs this year, citing concerns over another flare-up in inflation.
“Today’s higher-than-expected data will probably confirm the central bank’s belief that interest rates can’t be changed,” said Bank Pocztowy SA economists, led by Monika Kurtek. “The most important factor for the MPC will be inflation, which has just moved above the upper limit of the tolerance band and will remain there at least until the end of this year.”
Blame Game
Prime Minister Donald Tusk this week blamed slow economic growth on “restrictive, hawkish” monetary policy from central bank Governor Adam Glapinski, who last month said that easing may be delayed until 2026. Inflation has spent most of this year within the central bank’s target range, before accelerating to 4.2% in July.
Finance Minister Andrzej Domanski told public radio before the figures were released that while the economy is accelerating, it’s a concern that recent consumption-led growth was based on “so few engines,” with industry and a number of exporters showing signs of weakness.
The second-quarter GDP figure is the highest since the third quarter of 2022. According to economists at Bank Pekao SA, the faster-than-expected growth can be attributed to consumption, especially of services.
The zloty was little changed against the euro after the data, while the yield on two-year government notes increased one basis point to 4.87%.
--With assistance from Barbara Sladkowska, Maciej Martewicz and Konrad Krasuski.
(Updates with analyst comments and markets, from the fourth paragraph.)
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