Poland's economy above forecast

Poland's economy grew faster than expected at 6.1 percent y/y in the first quarter of 2008, Poland's statistics office revealed on Friday, making an interest rate hike more probable in June.

Statistics office data showed annual GDP growth above 6.1 percent when economists had forecast growth at 5.8 percent, revealing that Poland's economy showed flexibility in light of the strong złoty.

Commenting on the data, Deputy Finance Minister Katarzyna Zajdel-Kurowska said that the GDP growth showed that the economy was robust despite a global slowdown. "According to preliminary estimates, GDP growth in the second quarter should remain at a high level, about six percent, and 5.5 percent in the entire year," said Zajdel-Kurowska.

The report also revealed that investments rose 15.7 percent and domestic demand increased 6.3 percent.

"While the GDP growth rate is higher than expected, its structure is close to what was expected. The main growth driver was private consumption and here there was a significant acceleration compared to the fourth quarter," Łukasz Tarnawa, chief economist at PKO BP, told Reuters.

However, the data has economists predicting a rate hike. "The hypothesis that there will be a [rate] hike in June has strengthened after the data," Stanislaw Owsiak, a dovish member of the Monetary Policy Council (MPC), told Reuters.

Elisabeth Gruie, currency strategist at BNP Paribas agrees. "Another hike is still on the cards," she said.

Source: Reuters