Poland’s economic success is flourishing. Consumption has overtaken investment as the main engine of this growth. In the second quarter of 2023, consumption has become the key force driving this growth. Latest data shows consumer spending is still strong, supported by double-digit growth in sectors such as building material and garden equipment and supplies retailers. Based on these trends, while there are some headwinds in certain retail categories, the overall retail sales story is a positive one.
So too back in May when Poland astonishingly rosy growth reliant heavily on the furniture, electronics & appliances sector which saved Poland’s impressive 18.9% growth. This increase underscores the strong underlying demand for durable goods as consumers are still spending on their homes. One bright spot was motor vehicles, motorcycles and parts category—it posted its best month ever. On its own, it set an extraordinary 15.7% growth rate for the month.
Though industrial production in Poland jumped in May, it was still below expectations owing to a calendar effect. This gap indicates that the manufacturing sector is experiencing a rebound, but it is still trailing in sync with overall market predictions. Despite this, the industrial output is a honey of a silver lining, adding to a rosy overall economic picture.
Poland’s retail sales numbers for May underscore how critical consumer spending dollars are. This trend further pumps the narrative tires that consumption is powering the second quarter economic growth. Retail sales at constant prices increased by 4.4% on the year. This increase is a testament to consumer demand at all levels despite the recent volatility in some categories.
Only the “other” category of retail sales experienced a decline in May, as seven out of eight major categories of retail sales grew. This broad-based growth throughout nearly every sector highlights the resilience of consumer spending. Yet, the “food, beverages and tobacco products” sector experienced its first dip in three years, seeing just a 1.5% year-on-year growth. This tepid expansion was largely influenced by the late Easter holiday that fell in April, which distorted typical seasonal buying trends.
ING’s analysis suggests that while the overall retail sales landscape remains positive, the small uptick in food-related products dampened overall retail dynamics.
“food, beverages, and tobacco products” – ING analysis
And given all those headwinds, the retail sector’s performance acts as a leading indicator with economic forecasts overall. ING forecast a year-end acceleration of 5.2% in Poland’s retail sales, just above the consensus estimate of 4.3%. These projections are based on an assumption of the strong consumer confidence and high levels of consumer spending we’ve seen recently continuing.
Poland’s GDP growth outlook for the remainder of the year is still 3.2% or better. This figure is a reflection of economic stability, bolstered by a tried and true consumer base that has become more engaged due to investment found across multiple industries. Analysts anticipate Poland’s economy continuing this growth trend through 2025, with estimates showing a slighter annual growth rate.
“other” – ING analysis