Poland’s Economy Grows Faster Than Forecast on Fixed Investment, Exports

Poland’s economy grew faster than economists forecast in the third quarter as investment accelerated and a weaker zloty helped boost exports.

Gross domestic product rose 4.2 percent from a year earlier compared with a 4.3 percent increase in the previous three months, the Warsaw-based Central Statistics Office said today. That’s above the 4 percent median estimate of 30 economists surveyed by Bloomberg.

The European Union’s largest eastern nation, the only member of the 27-member bloc to dodge recession in 2009, has remained resilient even as the debt crisis in the neighboring euro region threatens to damp demand for its exports. Still, Poland isn’t immune to slower growth among its main trading partners and its economy will probably weaken into 2012, according to London-based HSBC economist Agata Urbanska.

“Investment growth held up strong but domestic-demand growth decelerated, dragged down by a contraction in public consumption,” Urbanska wrote today in a note clients. The stronger-than-expected growth “does not moderate the downside risks to the economic growth in the coming quarters.”

Stocks, Zloty

Poland’s benchmark WIG20 Index (WIG20) erased losses, rising 2 percent to 2,227.27 by 1:20 p.m. in Warsaw. The yield on five- year bond fell 0.7 basis points to 5.34 percent, while the zloty traded at 4.5239 to the euro, up from 4.5338 late yesterday.

The Polish currency lost 11.2 percent against the euro and 20.4 percent to the U.S. dollar in the third quarter, making Polish goods more attractive to foreign buyers. Net exports added 1 percentage point to GDP growth in the third quarter, with consumer spending contributing 1.8 percentage points and fixed investment 1.6 points, the statistics office said.

Fixed-investment growth quickened for the third consecutive quarter to 8.5 percent from a year ago, compared with a revised 6.9 percent in the second quarter. Private-consumption growth slowed to 3 percent from 3.6 percent.

“The figures show the economy isn’t really slowing,” central bank Governor Marek Belka said today on TVN CNBC. “They show Poland is in decent shape, even tremendous shape when compared with the rest of Europe.”

Among ‘Best Markets’

Sales at Unilever Polska slowed this year for the first time, “but this is not a drama as Poland is for us one of the best markets in the region,” Sanjay Dube, the company’s president, told Bloomberg Business Week this week.

Poland’s industrial output as measured by value grew 6 percent from a year ago in the third quarter, the office reported today. KGHM Polska Miedz SA (KGH) more than tripled third- quarter profit as the copper producer, which sells two thirds of its output abroad, benefited from higher prices for the metal and the weaker zloty.

The Organization for Economic Cooperation and Development this week upgraded its 2011 growth forecast for Poland to 4.2 percent from a May projection of 3.9 percent. Still, market consensus is moving toward 2012 growth of less than 2 percent, according to Citibank Handlowy’s chief economist Piotr Kalisz, who sees 1.9 percent expansion.

“Unfortunately, the scenario of deep recession in the euro region means there’s a risk our forecast may shift even lower,” he wrote yesterday in an e-mailed note.

To contact the reporters on this story: Monika Rozlal in Warsaw at mrozlal@bloomberg.net; Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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