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May 31 (Bloomberg) -- Economic growth in Poland, the only European Union member to escape a recession last year, slowed in the first three months of the year, held back by a harsh winter and lagging fixed investment.

Gross domestic product rose 3 percent from a year earlier, compared with the 3.3 percent pace of the previous quarter, a preliminary estimate by the Central Statistical Office showed today. The median estimate of 10 economists in a Bloomberg survey was 3.1 percent.

The harshest winter since 1979 stopped investment in construction, dragging down the industry’s output by an annual 24.6 percent in February. A more restrictive lending policy by commercial banks deterred companies from seeking financing, prompting them to cut jobs, while rising unemployment and slower wage growth tamed consumer demand.

“What’s striking is the scale of the investment drop, which is due to bad weather that paralyzed construction projects,” said Marcin Mrowiec, chief economist at Bank Pekao SA in Warsaw. “It’s not going to get much better for the rest of the year, because public-sector spending isn’t going to be able to offset the fall of private investment.”

The zloty eased against the euro, declining less than 0.1 percent to 4.0762 against the common currency as of 10:51 a.m. in Warsaw after trading little changed before the report.

Investment Drop

Fixed investment fell 12.4 percent in the quarter, the statistics office said, reversing a revised 1.1 percent growth rate reported in the last three months of 2009.

Private consumption rose 2.2 percent in the quarter, compared with a revised 1.7 percent in the fourth quarter, while domestic demand increased an annual 2.2 percent, improved from a 0.9 percent increase in the previous quarter.

Making up for winter delays and rebuilding the infrastructure from flood damages will probably boost investment later this year, Grzegorz Maliszewski, chief economist at Bank Millennium in Warsaw, wrote in an e-mailed comment.

“The improving income situation at households, which follows a recovery on the labor market, is favorable to private consumption and this trend should continue in the next quarters,” he wrote. “We expect accelerating economic growth on investment and a private consumption rebound.”

Rate Outlook

The GDP figure is “neutral” for the monetary-policy outlook, Elzbieta Chojna-Duch of the central bank’s Monetary Policy Council, said in a phone interview after the data release.

“Given that the economy’s main” pillar, “which is consumption, is still at a low level, this is yet another argument for leaving interest rates unchanged for some time,” said Monika Kurtek, senior economist at Bank BPH in Warsaw. The first-quarter investment drop is not worrying as it resulted from harsh weather conditions, she said.

Chojna-Duch said economic growth is likely to accelerate in the second quarter and may total between 3 percent and 3.4 percent for the whole year. She said it’s “too early” to conclude that accelerating private consumption in the first quarter will fuel inflation pressure later in the year.

“Growth could be better in the second quarter, but the concern is whether there will be a sustained recovery in Western Europe, which could weigh on consumption in Poland,” said Pekao’s Mrowiec.

Polish economic growth this year may be “near or above” 3 percent, Michal Boni, chief adviser to Prime Minister Donald Tusk, told TVN CNBC Biznes in an interview.

To contact the reporters on this story: Monika Rozlal in Warsaw at Dorota Bartyzel in Warsaw at

To contact the editor responsible for this story: Willy Morris at

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