Polish industrial production records first expansion since COVID-19 outbreak

Polish industrial production records first expansion since COVID-19 outbreak
By bne IntelliNews July 20, 2020

Poland’s industrial production grew 0.5% y/y in unadjusted terms in June, statistical office GUS reported on June 19. The fall follows a coronavirus (COVID-19) induced decline of -17% y/y in May.

Industrial production growth in June brought a major positive surprise, supported by the positive calendar effect as well as base effect, as the industrial sector contracted in June last year.

“The pace of post-pandemic recovery seems to be stronger than expected,” Erste said in a comment.

“Today’s releases are a reason for optimism suggesting that our [2020] GDP growth forecast that currently stands at -3.7% may see some upside risks. It is likely that the contraction in the second quarter does not have to be in the double digits as initially expected and may land … at around -5% y/y given recent data,” the Austrian bank added.

At around -4%, Poland is expected to withstand the shallowest coronavirus-induced recession in the EU. There is still substantial uncertainty about the depth of the contraction, however, with the National Bank of Poland, forecasting a GDP fall between -4.2% and -7.2% in 2020.

In adjusted terms, industrial production fell 4.9% y/y in June after declining 15.5% y/y in May, GUS data also showed. In monthly unadjusted terms, output grew 13.9% (10.1% m/m in May) in June while also expanding 9.7% m/m (May: 12.2% m/m) upon adjustment.

Broken down by key sectors and in unadjusted terms, output in manufacturing retreated 0.9% y/y in June, compared to a fall of 18.6% y/y the preceding month. 

Output fell 6.5% y/y in the mining and quarrying sector in the sixth month after declining 14.3% y/y in May. In the utility segment, production slid 4.3% y/y after falling 1.6% y/y the preceding month.

Production expanded 8.9% y/y in the water supply and waste management segment versus a decline of 2.6% y/y in April. 

In more detailed terms, production managed expansion in as many as 21 out of 34 branches of manufacturing in annual terms, GUS said. 

Producers of coking coal and refined oil products were hardest hit in June with the segment’s output falling 17.2% y/y. Production also contracted 17% y/y in coal and lignite mining and 15.2% y/y in the automotive segment.

Recovery was clear in the furniture segment, where output jumped 19.3% y/y in June or in the electrical equipment segment with an expansion of 16.9% y/y, GUS noted.