Poland's economy grew at its fastest pace in four years in 2015, data showed on Tuesday, driven mainly by domestic demand that analysts expect will be sustained this year despite external risks and a recent credit rating downgrade. The $425 billion economy grew by 3.6 percent last year compared with 3.3 percent in 2014, statistics office preliminary data showed. The growth is nearly twice as fast as the average in the European Union, estimated by the bloc at 1.9 percent.
The finance ministry said it estimates economic growth reached 3.8 percent in the last quarter of 2015. The ministry said it expects the survey-based unemployment rate fell to 7.5 percent on average last year from 9.0 percent in 2014. "The results of the Polish economy in 2015 should be seen as a very good starting point for growth in 2016," the ministry said in a statement.
ING Bank Slaski said in a note that overall, the data was very positive, suggesting macroeconomic fundamentals remain very solid. "That offsets to some extent the recent negative institutional changes which caused the S&P downgrade," it said. The data showed private consumption growth picking up to 3.1 percent last year from 2.6 percent in 2014. Domestic demand, which combines total consumption and accumulation, contributed 3.3 percentage points to growth, while foreign trade added 0.3 percent, the data also showed.
Despite the robust outlook for growth, rating agency Standard and Poor's (S&P) unexpectedly cut Poland's credit rating a notch earlier in January, saying the new government has weakened the independence of key institutions. The conservative Law and Justice (PiS) party won an election in October promising more welfare, particularly via its flagship programme of child benefits. But it has also passed laws that critics say undermined the independence of the judiciary and public media.
"We expect 2016 to bring about 3.6 percent GDP growth with upside risk coming from the domestic demand - especially consumption driven by the generous child benefit," Slaski said. "The downside risk comes from the external environment." The Polish zloty gained only slightly after the data, giving up some of the gains following a statement from another rating agency that warned about risks to its rating.