Poland’s industrial production growth picked up to 2.7% y/y in constant prices in February, after adding just 0.9% y/y the preceding month, unadjusted data from statistical office GUS showed on March 18.

The expansion was below market consensus, which expected growth of 4.5% y/y. The February reading does affirm the industrial sector’s post-lockdown recovery, although with what appears a stabilized growth path right now, analysts say.

Export-oriented branches of Poland’s industrial segment fared the best in February, data show. Production of electrical equipment, computers and electronic products, rubber and plastic products, and wood products all grew fast, benefiting from the global economic recovery.

Following the introduction of fiscal programmes limiting bankruptcies and preventing mass unemployment, Polish manufacturers are regaining strength with foreign consumers, Bank Millennium notes.  

Production of durable consumer goods grew 12.3% y/y in February as a result. On the other hand, production of investment goods remains weak, in line with companies’ reduced investment activity. 

Seasonally adjusted, industrial production weakened its expansion pace, growing 4.5% y/y in the second month after an expansion of 5.7% y/y in December. 

The monthly reading showed an unadjusted pick-up of 4.3% (-5.1% m/m in January) and an expansion of 0.4% upon adjustment (January +1.7% m/m).

Broken down by the main segments, output grew an unadjusted 2.7% y/y (+0.8% y/y in January) in manufacturing. Production also expanded 8.2% y/y (January +5.6% y/y) in water supply and waste management.  

There also was a gain of 4.3% y/y (+1.6% y/y in January) in the utility sector. Once again, output sliding 6.1% y/y (January -2.1% y/y) in mining and quarrying held back the headline figure to an extent. 

Overall, production increased in 17 out of 34 industrial segments in February in y/y terms. January saw y/y expansion in 15 segments.

“In the coming months, real economy data will be characterized by increased volatility due to an extremely low base from last year. In April-May 2021, strong double-digit growth of industrial production cannot be ruled out,” Erste said.

Overall, however, analysts seem to agree economic activity will continue recovering. “The development of the pandemic remains the key growth risk factor this year. The recent spike in new COVID-19 cases in Poland resulted in re-introduction of stricter rules ... but the tightening will only have a limited impact on manufacturing as it mainly affects services and retail,” Erste said.

“A marked acceleration of the economy is still likely in the second half of the year, assuming the stabilisation of the pandemic,” Bank Millennium said.

As vaccination programmes are steaming ahead in the US and the UK, while the China situation appears favourable, the global economic sentiment should stabilize, according to Bank Millennium. 

“While short-term prospects in Poland are burdened with greater risk, especially when it comes to the situation of the services sector, the medium-term outlook remains positive,” it said.

Barring an unexpectedly dramatic turn in the course of the pandemic, analysts agree that Poland’s economy will recover this year, growing 3%-4%.