Polish industrial production goes deeper into recession mode in March

Polish industrial production goes deeper into recession mode in March
/ bne IntelliNews
By Wojciech Kosc in Warsaw April 24, 2023

Poland’s industrial production deepened decline to 2.9% year on year in constant prices in March (chart), after a revised fall of 1% y/y the preceding month, unadjusted data from the statistical office GUS showed on April 24.

The March fall was 1pp below the consensus line, pointing clearly to a decline in activity in the industrial sector that is consistent with the weakening of demand amid high inflation and high interest rates in Poland. Industrial production data and other data published on April 24 might even point to a technical recession in Poland in early 2023, with full-year growth expected at no more than 1%.

On a positive note, industrial sectors focused on exports did not suffer much in March, analysts point out. 

“The only industry segment that contributed to the overall production growth was export industries. Production dynamics in these companies increased to 3.5% y/y in March from 2.1% in February,” Credit Agricole said in a comment.

“Industries in which the majority of sales are directed abroad therefore remain immune to the downturn in Poland's main trading partners,” it added. 

Seasonally adjusted, output growth fell 2.5% y/y in March, following a decline of 1% y/y the preceding month, GUS data showed. 

In unadjusted monthly terms, industrial production grew 14.1% in March after inching up a revised 0.6% m/m in February, GUS also said. The adjusted month-on-month fall came in at 1%, deepening slightly versus a decline of 0.9% m/m in February. 

Broken down by the main segments and in unadjusted terms, output declined 0.4% y/y in March in manufacturing after a revised fall of 0.8% y/y in February. 

Output in the utility sector crashed 21.8% y/y in March after a revised fall of 4.2% y/y the preceding month. 

In water supply and waste management, production slid 3.4% y/y in March, which followed a revised decline of 0.8% y/y in February.

Production also decreased 7.2% y/y in mining and quarrying, reversing on an expansion of 3.5% y/y in February, GUS data also showed.

Overall, production rose in just 14 out of 34 industrial segments in March in y/y terms, down from 15 in January. 

Industrial production data do not change much in the outlook for Poland’s monetary policy. The National Bank of Poland’s reference interest rate has remained at 6.75% since September.