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    Strong retail sales and construction output outperform expectations.

    Retail sales in Poland rose 13.6 per cent in April compared with the same month a year earlier, the Central Statistical Office (GUS) said on Thursday. Construction output also increased.

    Sales of food, beverages and tobacco products increased by 21.5 per cent in year-on-year terms, while sales of furniture, consumer electronics and household appliances were up by 20.3 per cent. Sales of fuels rose 10 per cent and those of motor vehicles and automotive parts increased by 9.1 per cent. In real terms, retail sales last month were 11.9 per cent higher than in April 2018, GUS reported.


    Spending during the Easter holidays was stronger than a year ago. And retail sales in these sectors are expected to remain strong in these categories in the next few months, given the introduction of fiscal programmes including a lump sum pay out to pensioners this in May and an extension of child benefits in July. Overall, private consumption is forecast by ING to accelerate from approximately 4.2 per cent in the first quarter to 4.4 per cent in the current quarter and exceed 5 per cent year on year in the third quarter.


    Construction output also remained good, increasing from 10.8 per cent to 17.4 per cent on a year on year basis. The strong increase was related to spending on infrastructure projects with growth in this category expanding by 32.7 per cent year on year. However, the construction of buildings was less dramatic at 3.9 per cent year on year, likely due to a slowdown in housing activity.


    According to initial GUS data, investment outlays in big companies (employing 50+ workers) rose by 21.7 per cent year on year, mainly due to expenditure on vehicles and building construction. A moderation of infrastructure spending is expected in the coming months and still soft growth in the construction of dwellings. Therefore, investment is projected to decelerate from approximately 7% in the first half of 2019 to 5% in the second half.


    Overall, the data points to strong GDP growth in the second quarter, with ING increasing its forecast for GDP growth in the second quarter from 4.3 per cent to 4.4 to 4.5 per cent, slightly below quarter one’s 4.6 per cent.


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