Finance minister Zyta Gilowska indicated yesterday that GDP growth may top 6 percent this year. Interestingly not long ago the ministry upheld its 5.5% y/y official forecast after the exceptionally strong January industrial and construction output data were released. This suggest that rather than by data Gilowska’s view may have been buoyed by the recent optimistic estimates from the European Commission according to which 2007 growth would reach 6 percent in year on year terms.
Even though we expect Q1 growth to (at least) match the exceptional 6.5% recorded in Q4 2006, we also believe that strong quarterly growth pace seen in recent quarters will be difficult to maintain, which would push annual growth down somewhat in the second half of the year. Hence we believe that both the FinMn and the EC are a bit too optimistic on the whole-year result. Nevertheless the risks for growth seem skewed visibly to the upside – were the economy to surprise to the upside in remainder of Q1 we would have to reassess our 5.6% y/y estimate.