First quarter GDP growth outstrips expectations, but is it just a flash in the pan?

In the first quarter of the year GDP grew by 6.9%, which was a much better result than many economists had predicted. "The growth was a huge surprise, as we thought 6.5% was a very optimistic presupposition," said Katarzyna Zajdel-Kurowska, an economist at Bank Handlowy, who believes that such dynamic growth was due to strong exports and increased private consumption. There has also been a boom in investments, according to economists, with companies in Q1 spending 3.5% more on plant and equipment than in the previous quarter, which saw growth of just 0.1%. According to Marek Zuber of Treasury Management Services (TMS), this Q1 increase was mainly due to fears of increased prices and tax changes as a result of EU accession. Consequently, it is debatable whether such GDP growth can be sustained and thus it is likely it will trail off over the coming financial quarters. (Parkiet, p. 7) A.F.