UPDATE 1-Consumption powers Polish economy, investment slowly recovers

* Polish Q3 GDP growth at 4.9 pct y/y, highest since Q4 2011

* Investment up 3.3 pct, following sharp decline in 2016

* Data signal firms still holding back investment - analyst

* Record low unemployment, new child benefit help consumers

(Adds graph) WARSAW, Nov 30 (Reuters) - A strong rise in consumption together with rising exports and a recovery in investment propelled Poland's economic growth to nearly five percent in the third quarter, its fastest pace in five and a half years, official data showed on Thursday. Economic growth accelerated to 4.9 percent year-on-year in the third quarter, above an earlier estimate of 4.7 percent and among the fastest rates in the European Union, compared with 4.0 percent in the three months to June. A breakdown of third-quarter growth published for the first time on Thursday showed total consumption added 3.2 percentage points to the annual growth rate, foreign trade 1.1 percentage point and investment added 0.6 point. In seasonally-adjusted terms, the economy grew by 5.2 percent year-on-year in the third quarter and 1.2 percent quarter-on-quarter. "This is a very good reading, the best in years," said Urszula Krynska, economist at the Warsaw-based Bank Millennium. Private consumption rose by 4.8 percent year-on-year, supported by a record low level of unemployment and wages rising at their fastest pace in years. Investment, seen by analysts as crucial to the growth outlook, rose by 3.3 percent year-on-year following a decline of nearly eight percent in 2016, partly due to a slowdown in the inflow of development aid that Poland receives from the EU. "Investment has disappointed ... as firms are still holding it back," Krynska said. "Investment will accelerate thanks to the large inflow of EU funds," Millennium's Krynska said. Central bank surveys have shown that a rise in unpredictability about the future tax burden under the right-wing Law and Justice (PiS) party government was currently the main reason discouraging private investments, following by rising labor costs. The share of investment in Poland's GDP - at 17.0 percent in the third quarter - was close to its lowest in two decades. The PiS - in power since late 2015 - has launched a new, generous child benefit and reversed a cut in the retirement age. The party also introduced a new bank tax and increased value added tax collection, slapping more reporting requirements on firms and raising penalties for tax avoidance. Some analysts said the Polish government's conflicts with the EU could also be discouraging firms from investing more. The European Commission in November voiced fresh concerns over Poland's plans to reform its judicial system and EU lawmakers voted to demand that the 28 member states punish Warsaw by triggering a procedure that could lead to a cut in the EU aid Poland receives.

(Reporting by Marcin Goettig and Bartosz Chmielewski; Writing