Boston, MA -- (SBWIRE) -- 06/03/2014 -- The economic recovery in Poland continues to gather momentum, with leading and coincident indicators - particularly retail sales and wage growth - pointing towards improvements in domestic demand in addition to the export-driven real GDP growth that arrived in the second half of 2013. The acceleration in euro area growth, particularly in key trade partners such as Germany will continue to drive forward Polish export growth. Furthermore, the recovery in international trade will continue to feed-through into the labour market, resulting in positive employment gains as hiring improves.
Real GDP grew 2.7% y-o-y in Poland in Q413. While the reading was slightly lower than consensus expectations for 2.9%, BMI had been cautioning for some time that market expectations for Polish growth had been turning slightly too exuberant, despite the positive outlook. Nonetheless, the economic outlook for Poland remains highly encouraging, and we recently revised up our growth forecasts for 2014 to 2.9%, from 2.6% previously. Although we are optimistic about Poland's growth prospects, we are more cautious regarding metal consumption and production prospects. Key metal consuming segments such as autos and particularly construction will underperform.
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Looking at the longer term, we expect growth in Poland as an autos export hub to remain steady, though construction activity will be underwhelming. Production of steel, copper and lead will grow, but at a slower rate than demand. In the case of copper, BMI expects investment in the sector to be deterred by weak copper prices and declining ore grades. Stagnant domestic mine production, higher taxes and low metal prices will likely serve to restrain investment into production facilities more broadly.
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