Polish industrial production growth accelerates as second half opens

Polish industrial production growth accelerates as second half opens
By bne IntelliNews August 20, 2017

Polish industrial production grew 6.2% y/y in July, data from statistical office GUS showed on August 18.

The reading represents a rebound at the start of the third quarter following a weak result in June, as the sector’s growth slumped to 4.5% from May’s 9.1%. Despite that hiccup, which followed an even weaker April, the sector helped push second-quarter economic expansion to a better-than-expected 4.4% in adjusted terms. Hand in hand with a similar profile for retail sales, July’s industrial boost offers a good start to the third quarter.

On top of that, following a slump last year related to a drop in EU structural fund inflows, construction continued to recover in July. Output in the sector grew by 19.8% y/y last month – the best performance since January 2012.

Industrial production grew 5.8% y/y in in January-July. The Polish economy expanded 2.7% last year, with investment especially disappointing. However, GDP surged to 4% y/y in the first quarter.

The data “suggests that the economy grew by around 4.5% y/y at the start of Q3,” write analysts at Capital Economics. “That would be even stronger than the impressive rates of expansion seen in the first half of the year.”

However, they add that they expect the ongoing boom to be short-lived. “We think this golden period of strong economic growth will soon start to fade. We expect growth to hit a peak in Q3, before losing momentum in 2018-19 as the EU fund-related rebound in construction fades, interest rates rise and fiscal policy becomes less supportive,” they write.