Poland’s economy is on the way to a 3% YoY GDP growth in Q3 2022
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The August retail sales increased by 4.2% year-over-year in August. This was after a 2% increase YoY in July. The seasonal data further shows that after two months of declines in month-on-month sales, a growth was seen in August.
Poland’s economy headed toward growth
On a YoY basis, the largest gain was reported in the necessities like clothing, footwear, and pharmaceuticals. The sale of durable goods also dropped, and there were signs that the sales would stabilize after the supply limitations eased.
The demand for durable goods has also dropped in recent months following uncertainty and weak customer sentiment. While sales had some signs of weakening, a rise in the sales for necessities was high. Over the coming months, it is expected that the price increase will pressure purchasing decisions and lead to households being cautious in spending as heating and electricity costs are expected to rise during the winter.
The retail sales show a scenario where the economy will witness a gradual slowdown due to dropping consumption. Growth during the second half of 2022 is also expected to be slower than in the first half of 2022. During the first half, the easing of restrictions boosted demand.
A rise in residential construction
Data from the housing industry shows deteriorating trends in the upcoming quarters, but construction was on the rise. One of the threats to the annual growth during the third quarter is the lack of support from the inventory adjustments that support economic growth during the first and the second quarter of 2022.
The monthly data set for August also shows that the forecast for the third quarter of 2022 is a 3% YoY growth and a 0.6% quarter-on-quarter growth. In August, the building construction sector recorded a 25.7% YoY expansion after 11.7% in the previous month.
On the other hand, there was a decline in the number of housing construction started. Additionally, industries linked to infrastructure investment also performed poorly. These industries include civil engineering and specialized construction.
The current data mirrors the trends seen in past months. In residential construction, started projects were being completed. Companies were also trying to fill the existing demand for housing.
There was also a decline in new construction, showing a rise in concerns about the future following an increase in the interest rates. The poor performance of industries linked to infrastructure investment was also of concern. This weak performance could be attributed to a notable increase in production costs, making it difficult to release new tenders. The lack of funds from the Recovery Fund was also another factor to consider.