Poland’s retail sales have exceeded expectations, thanks to increased gasoline sales and a positive trend in the economy. The surge in sales can be attributed to several factors, including the recovery of real disposable household income, substantial wage growth, and decreasing inflation. It is anticipated that consumer spending will play a pivotal role in driving economic growth in 2024.
In September, retail sales demonstrated a surprising upturn, with a mere 0.3% decrease compared to the previous year, contrary to forecasts of a 2.0% YoY decline. This rebound followed a 2.7% YoY decrease the prior month. On a month-on-month basis, seasonally adjusted sales rose for the fourth consecutive month, surging by 2.2%. This upswing was propelled, in part, by a notable increase in fuel sales, driven by favorable reference bases and lower prices. This encouraged both local and neighboring country residents to refuel their vehicles.
Car sales also showed signs of recovery, with a 9.8% YoY increase. On the flip side, clothing and footwear sales experienced a significant decline (-16.3% YoY), primarily due to the delayed demand for autumn wear caused by warmer weather. Last year, the influx of Ukrainian refugees likely contributed to the demand for clothing.
The upturn in sales can be attributed to strong fuel purchases, facilitated by lower prices. The key driver of this resurgence is the improving household disposable income, fueled by double-digit wage hikes and decreasing inflation. This upward trend is expected to persist, supporting a rebound in private consumption during the fourth quarter after a year of declines. In fact, consumption is projected to be the primary force behind the anticipated growth acceleration in 2024.
This resurgence indicates a return to an inflationary GDP structure. Consequently, there is a pressing need to bolster domestic enterprise investments, which have lagged behind for several years, and to unlock funds from the EU’s Recovery and Resilience Facility (RRF) and pent-up Foreign Direct Investment. This will help restore a sustainable GDP structure, thereby enhancing economic potential.
While the growth outlook for Poland appears brighter, the composition of this growth is expected to have a pro-inflationary impact. With almost complete September data from the real economy, it is possible to assess the overall economic situation in the third quarter of this year. GDP is estimated to have grown by approximately 0.4% YoY, following a decline in the first half of 2023. The composition of GDP is anticipated to involve a smaller decrease in household consumption, slower investment growth, a less negative impact from changes in inventories, and a reduced supportive role of net exports. The preliminary estimate for 3Q23 GDP will be released on November 14, along with revised quarterly GDP data for 2022-23.
As for forecasts, the expectation is for a 0.4% GDP growth in 2023, with an acceleration to 2.5% in 2024. If the new government can swiftly reach an agreement with Brussels to unlock RRF funds and secure the release of delayed tranches, there is a growing chance of higher economic growth in 2024-25.
