Data published this morning show Poland’s economy contracted for the first time since 2012 in the first quarter, unwelcome news ahead of a crucial credit rating review from Moody’s later today.
The Polish economy contracted 0.1 per cent in the first quarter, well below the 1.3 per cent expansion seen in the previous quarter, and substantially below the 0.6 per cent growth forecast by economists.
Year-on-year the economy expanded 3 per cent. This also falls short of economists’ expectations of a 3.5 per cent expansion, and the 4.5 per cent growth seen in the last quarter of 2015.
After the market closes, Moody’s will review Poland’s credit rating. The zloty and Polish government bonds have been under pressure ahead of the review, with most analysts predicting either a rating downgrade, or a shift to a negative outlook.
Earlier this morning, Hungary also churned out some shockingly weak economic growth data.
After the market closes Moody’s will review Poland’s credit rating. The zloty and Polish government bonds have been under pressure ahead of the review, with most analysts predicting either a rating downgrade, or a shift to a negative outlook.
In a Reuters poll of 24 analysts, 13 said they expect Moody’s to cut Poland’s outlook, while 11 predicted a downgrade. It is currently rated A2, with a stable outlook.
A month ago Moody’s warned that Poland’s constitutional crisis could scare off foreign investors.
In January, Polish bonds and the zloty sold off heavily when Standard and Poor’s downgraded Poland’s credit rating for the first time since it started rating the country’s debt in 1996.
The Hungarian economy also suffered its worst contraction in four years in the first quarter, driven in part by a 33.9 per cent plunge in construction output in March.
Quarter-on-quarter Hungarian GDP contracted 0.8 per cent, well below economist forecasts of 0.4 per cent growth and a stark deterioration from the 0.6 per cent expansion seen in the pervious quarter.