Second estimates confirmed that Q3 real GDP growth slowed to +3.9% y/y (from +4.6% in Q2), the first reading below +4% since Q4 2016. Q3 growth was boosted by strengthening public spending thanks to fiscal stimulus ahead of the elections in October, while the expansion in consumer spending (+3.9% y/y) and fixed investment (+4.7%) moderated. A decline in inventories pushed Q3 growth down further by -0.7pp. Slowing capital spending is in line with continued weak sentiment in the manufacturing sector. Although the manufacturing PMI edged up to 46.7 points in November (from 45.6 in October), it nevertheless recorded its second-lowest reading since July 2009 and has now been below the 50.0 mark for 13 months in a row, indicating deteriorating conditions in the sector. Anemic new domestic and external orders are key drivers of the weak PMI. As a result, we expect the Polish GDP growth to decelerate further and forecast +4.2% in 2019 as a whole and +3.1% in 2020.
