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Growth Slows In Polish Manufacturing Sector

James Boston
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Growth Slows In Polish Manufacturing Sector

The hope that a recent down month in Polish manufacturing was a one off seems to be fading as today’s figures reveal another significant fall. The Industrial Production growth numbers had been reasonably stable until they took a plunge into negative territory in August, the strong recovery in September however appears to have been short lived as evidenced by today’s data release. Year on year Polish Industrial Production is now expanding at a rate of just 1.6%, well below the medium term average of around 4.0%, today’s recording represents a drop from the 4.2% expansion seen in September and comes in slightly below market expectations. Further exacerbating Poland’s production slowdown is the slowing of the pace of falling input prices. The October Producer Price Index (PPI) is now showing a year on year fall of just -1.2%, this comes in the wake of a September recording of -1.6% and compares to a consensus estimate of -1.3%.

The slowdown in Poland’s growth rate is just a temporary phenomena, at least according to the country’s Central Bank. The Bank has in effect put it’s money where it’s mouth is, markets were surprised earlier this month when a much anticipated quarter point interest rate cut failed to materialise from the scheduled monetary policy committee (MPC) meeting. Poland’s Central Bank had in the previous month reduced rates by 50 basis points to 2% and further cuts were almost unanimously expected as evidence of slowing economic growth began to surface. Central Bankers however appear to be taking advantage of what they term as a temporary slowdown in order to allow the inflation rate settle below their target 2.5% level. According to official projections the rate of GDP growth in Poland is still on course to come in at 3% for the full year despite the impact of the Russian sanctions on the economy.

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