Data from the end of 2009 as well as the first two months of 2010 indicate that the late-year uptick experienced by the economy hasn’t petered out. Poland’s GDP growth in Q4 2009 amounted to 3.1 percent y/y, according to the Central Statistical Office’s preliminary estimates, slightly bettering economists’ expectations.

Source: Central Statistical Office

Net exports accounted for 2.2 percentage points of GDP growth, while domestic demand contributed 0.9 percentage points. The złoty has appreciated since Q4 2009, and the consensus among economists is that exports could fall but domestic demand will grow, keeping GDP growth at a similar level throughout the year.

Investment activity returned to positive growth in Q4 (1.6 percent), but growth in private consumption remained weak at two percent. Citi Handlowy experts expect private consumption growth will slow further in 2010. “Therefore, despite the relatively strong GDP growth, we do not see too much of a risk for price stability,” they wrote.

Since the start of this year positive signals have been coming from the industrial sector. The Purchasing Managers Index rose to 52.4 points in February, compared to 51 in January, according to data published by HSBC (a value above 50 points indicates expansion). “PMI was just another piece of good information that fits well with the overall positive sentiment,” Łukasz Wojtkowiak, an FX analyst at Bank Millennium in Warsaw, told Reuters.

Government officials now admit that the 2010 budget’s economic forecast assumptions may have been overly conservative. This year’s budget stipulates a zł.52.2 billion budget deficit, with GDP growth of 1.2 percent.“There is a chance that this year’s budget deficit will be several billion złoty lower [than expected] thanks to the macroeconomic situation,” Deputy Finance Minister Ludwik Kotecki commented.