Economists from PKO BP expressed growing doubts about the scale of the anticipated recovery in Poland’s industrial sector, citing weak eurozone conditions and declining direct investment as key challenges. Recent data from the Central Statistical Office (GUS) reveals that industrial production in September 2024 fell by 0.3% year-on-year, although it increased by 9% compared to August. Construction output, on the other hand, saw a 9% year-on-year decline, despite a 12% monthly rise.
PKO BP economists noted that industrial production has stagnated since mid-2022, with a particular decline in the production of capital and supply goods. The automotive industry, heavily impacted by the struggles in Europe, has seen its output drop for the fourth consecutive month. However, sectors like metal products and food production remain relatively stable, with the latter growing 5% year-on-year.
The construction sector’s challenges stem from a transitional period between EU funding perspectives and high interest rates, leading to reduced private investment. Nevertheless, the economists are optimistic about 2025, expecting a rebound driven by new EU-funded projects, private investments, and interest rate cuts.
Inflation in the industrial sector also showed a 6.3% year-on-year decline in producer prices for September, with economists attributing this to lower oil prices and widespread deflation across most industries.
While a recovery is still anticipated, PKO BP economists are increasingly cautious, pointing to both short-term demand issues in the eurozone and long-term concerns over foreign direct investment inflows.