Consumption drives economic growth while investment declines

Final GDP reading in line with the flash estimate

In accordance with Statistic Poland’s (GUS) final estimate, GDP growth in Poland increased from 3.2% YoY in Q1 to 3.4% YoY in Q2, consistent with the flash reading. Seasonally-adjusted quarterly GDP growth accelerated from 0.7% QoQ in Q1 to 0.8% in Q2.

Consumption drives economic growth

The main driver of the acceleration in Q2 was stronger consumption growth, which rose from 2.5% YoY in Q1 to 4.4%, adding 1.0 pp. to the GDP growth rate. Moreover, the scale of the acceleration in private consumption was substantially higher than our forecast (3.8%) and market expectations (3.6%). This higher consumption growth was supported by a marked increase in the real growth of the wage fund, boosting demand for goods and services. A higher household propensity to consume was also signalled by robust retail sales data in Q2. Consumption was further supported by the shift in the timing of Easter compared with 2024.

Net exports supported faster GDP growth

In Q2, GDP growth was also supported by a stronger contribution of net exports (-0.4 pp. vs. -1.1 pp. in Q1). Weaker domestic demand growth (4.0% YoY in Q2 vs. 4.6% in Q1) was reflected in slower import growth (2.6% YoY in Q2 vs. 3.5% in Q1). Meanwhile, export growth increased to 1.5% YoY in Q2 from 1.1% in Q1, consistent with the moderate economic growth observed in the Eurozone (1.4% YoY in Q2 vs. 1.5% in Q1).

Investment below zero

The biggest surprise in today’s data release was the decline in investment by 1.0% YoY in Q2, following a 6.3% increase in Q1. Both we and the market expected a substantial increase in gross fixed capital formation in Q2 (by 7.0% YoY and 4.7%, respectively). The fall in investment is also surprising because according to Statistics Poland’s data, investment of enterprises employing at least 50 people in real terms increased by 0.8% YoY in Q2, following a 3.6% drop in Q1. We believe that the overall decline in investment in Q2 was driven mainly by lower public spending on gross fixed capital formation. This assessment is supported by data on investment by local government units (reduction of the nominal growth rate from 11.2% in Q1 to 4.6% YoY in Q2) and construction and assembly production in the “civil engineering works” category (-7.1% YoY in Q2 vs. -1.0% in Q1). Despite today’s weaker figures, we maintain our scenario that the coming quarters will bring a recovery in overall investment growth, driven primarily by investment projects co-financed with EU funds.

Inventory adjustment weighed on GDP growth

The slower GDP growth on Q2 vs. Q1 also reflected a 1.2 pp. lower contribution from inventory accumulation. The decrease in inventories was consistent with PMI survey results, which showed that in Q2 manufacturing reduced inventories of both finished and intermediate goods. This partially stems from the fact that in Q1 Polish exporters fulfilled increased orders from the Eurozone, where businesses brought purchases forward in anticipation of the tariffs announced by the Trump administration. In Q2, external demand weakened and Polish firms adjusted inventory levels to a lower order flow.

2025 GDP forecast remains unchanged

Today’s Q2 GDP figures, combined with July’s monthly releases published in recent weeks, do not change our GDP growth forecast for 2025 (3.6% vs. 2.9% in 2024). However, the breakdown of GDP growth will need to be adjusted. We will present our revised scenario in the next MACROmap.

At the same time, we believe that today’s GDP figures are neutral for the PLN and yields on Polish bonds.