Poland’s industrial production crashed 24.6% y/y in unadjusted terms in April, statistical office GUS reported on May 21. The huge fall follows a decline of 2.3% y/y in March.
A contraction had been expected all along in April, the first full month of lockdown imposed by the government to contain the coronavirus (COVID-19) pandemic. However, the magnitude of the fall surprised the market, which predicted a contraction of around 12%. That might translate into a bigger recession in 2020.
“Our current forecast of GDP falling 10% y/y in Q2 is at a downward risk,” Bank Millennium said in a comment.
Following the disastrous industrial production reading, analysts could now revise their outlooks for the whole of 2020, currently predicting a GDP fall of 4%-5% - although that will depend on readings like retail sales, due tomorrow, and other data.
That said, the outlook for the industrial sector in the coming months can only be optimistic, given the coronavirus restrictions are being gradually lifted, Erste notes.
“[While] today’s reading suggests that the situation in the manufacturing sector is dramatic after the full month closure and returning to full capacity will only be gradual, April was likely the bottom of the current crisis.
“With steady easing of distancing measures since the beginning of May, the industrial output will likely begin to slowly recover,” the Austrian bank added.
In adjusted terms, industrial production fell 24.7% y/y after declining 4.8% y/y in March, GUS data also showed. In monthly unadjusted terms, industrial production crashed 25.5% in April while also falling 20.8% m/m upon adjustment.
Broken down by key sectors and in unadjusted terms, output in manufacturing retreated 27.5% y/y in April, compared to a fall of 3% y/y the preceding month.
Output fell 8.8% y/y in the mining and quarrying sector in the fourth month after declining 4.8% y/y in March. In the utility segment, production slid 1% y/y after growing 4.7% y/y the preceding month.
Production also fell 3.1% y/y in the water supply and waste management segment versus an expansion of 4% y/y in March.
In more detailed terms, production fell in 30 out of 34 branches of manufacturing in annual terms, GUS said.
Carmakers were hardest hit with the segment’s output collapsing 78.9% y/y. Production also contracted 34% in the general machinery segment while falling 28.1% y/y in electrical equipment and 25.9% in the rubber and plastics segment.
Production increased 14.8% y/y in the pharmaceuticals segment although, in m/m terms, it declined as much as 37.2%, GUS also noted.