The Polish economy shrank slightly less than expected in the first quarter of 2021, statistics office data showed on Friday, as a strong recovery in industry offset disruptions to tourism, retail and restaurants from the COVID-19 pandemic.
Gross domestic product (GDP) fell by 1.2% year-on-year. Analysts polled by Reuters had anticipated a decline of 1.3%.
Central and Eastern European countries look set to rebound strongly from the pandemic. Poland, the largest economy in the region, has so far proved more resilient to the coronavirus outbreak than most countries on the continent.
“The beginning of the year was good for the economy and, taking into account the stabilisation of the epidemic situation and the progress in vaccination, the next quarters should be positive,” said Grzegorz Maliszewski, chief economist at Bank Millennium.
On a month-to month basis, the economy grew 0.9%, slightly below the 1.1% forecast by analysts.
The Polish data followed a better-than-expected flash reading in the Czech Republic, where government spending and external demand compensated for sagging household consumption.
Hungary, Romania and Slovakia will report first quarter GDP on Tuesday.
Polish inflation was 4.3% year-on-year, according to the statistics office, in line with a flash estimate and above the upper limit of the central bank’s target range.
Inflation has also shot above central bank target zones in the Czech Republic and Hungary, but so far markets have only tipped the Czech National Bank to react this year with an interest rate increase.
Adam Glapinski, governor of Poland’s central bank, has said that it will start thinking about raising rates in the middle of 2022.
PHOTO: A panoramic view of Warsaw with, in the centre, the Palace of Culture and Science. Source: EC – Audiovisual Service