Poland's economy continues to grow at a sustained pace, demonstrating to be only marginally affected by the deterioration of the international environment.
In the first quarter of 2019 Gdp increased by 4.7% year-over-year, only slightly decelerating compared to the previous quarter. Domestic demand remained the driver of growth, supported by dynamic consumption and investment: the former continued to grow at around 4% thanks to favourable labour market developments; the latter benefited from increase in utilisation of the EU funds translating into a rapid expansion of public investment, along with signs of increasing private investment.
Inflation remains low, even though it rose in the first months of 2019, reaching over 2% in April. Expectations of strong wage growth, reflecting high capacity utilisation levels and wage increases in the public sector, could lead the Central Bank to reverse the current accommodative monetary policy stance.
Fiscal policy has taken an expansionary direction since the approval of the stimulus package at the end of February, leading to a deterioration of the public deficit to an estimated 1.6% of GDP in the current year, compared to 0.4% in 2018. The higher deficit is largely linked to measures such as the increase of social transfers to pensioners and households with children.