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Surprising acceleration of exports in Q4

Final GDP data in line with the flash estimate

In accordance with GUS data published today, real GDP growth rate stood at 4.9% YoY in Q4 2018 vs. 5.1% in Q3, running in line with our forecast and the flash estimate released by GUS on 14 February 2019. The QoQ economic growth rate dropped from 1.6% in Q3 to 0.5% in Q4, hitting the lowest level since Q3 2016. The structure of GDP growth was only partly consistent with our estimates that were based on the preliminary annual data on GDP (see MACROpulse of 31/1/2019). The biggest changes compared to the implied structure of GDP growth in Q4 occurred in the contribution of net exports (negative) and in the contribution of the change of inventories (positive).

Surprising acceleration of exports

The dynamics of investments decreased to 6.7% YoY in Q4 from 9.9% in Q3 while their contribution to GDP growth has not changed and amounted to 1.7 pp. In turn, the slowdown in private consumption proved to be smaller than expected earlier (4.3% YoY in Q4 vs. 4.5% in Q3) but private consumption remained the main source of GDP growth in Q4 (contribution amounting to 2.2pp). Smaller scale of slowdown in private consumption growth is consistent with the earlier data pointing to acceleration in retail sales and wage fund growth in Q4.

In the context of a downturn abroad, most surprising in the structure of GDP for Q4 is the acceleration in exports up to 8.9% YoY vs. 4.9% in Q3. This may suggest growing competitive advantages of Polish enterprises abroad. Such view is supported by data on international trade in goods – the scale of the slowdown in exports in Poland in Q4 was the smallest among the countries of the region. At the same time we saw a sharp increase in the dynamics of imports to 9.0% YoY from 6.9% in Q3. Consequently, the contribution of net exports increased less than we had expected (to 0.2 pp in Q4 from -0.9pp in Q3). At the same time it was the factor which boosted GDP growth to the biggest extent.

The main limiting factor for GDP growth in Q4 was lower contribution of inventories (0.0 pp vs. 1.0 pp). However, it should be emphasized that the increase in inventories in Q4 (PLN 15.0bn) stood at a relatively high level. In accordance with business survey results, the manufacturing companies increased inventories in Q4, which showed that they were still optimistic at the time as to future business climate.

Upside risk to forecast of GDP growth in 2019

The data on GDP in Q4 do not alter our view of the outlook for economic growth in 2019. Significant changes planned by the government in fiscal policy (see MACROmap of 25/2/2019) pose a substantial upside risk to our forecast of economic growth in 2019 (3.3% vs. 5.1% in 2018). On 11/3/2019 we will present our revised macroeconomic scenario taking into account the impact of the aforementioned fiscal package.

Today's data on GDP in Q4 are neutral for PLN and the prices of the Polish debt.