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Industrial output growth result of improved economy


In our view, the consistent rapid growth of industrial output observed over the past six months confirms that the recovery in the sector is not merely a statistical effect resulting from a very low reference base, but also reflects an underlying improvement in economic conditions. And although the growth rate registered in April was somewhat below market expectations, even despite favourable base effects, we should take into consideration the negative impact on domestic demand of the period of national mourning in the aftermath of the presidential plane crash (closed shops and service establishments, subdued willingness to spend). Although the strong rebound of production led to a certain increase in the level of inventories, the global economic recovery and especially the revival of economic activity in Germany (the largest recipient of Polish exports) mean that the robust pace of industrial output growth can be expected to continue in the months ahead (though the level of output in May is likely to be pulled down by the effects of the flood, which caused many companies in the affected areas to suspend operations, not only manufacturers but also their customers). At the same time, however, we should keep in mind that in the latter part of the year, as the favourable impact of base effects disappears, comparable levels of output growth will be significantly harder to achieve. Therefore we forecast that in 2010 as a whole industrial output will rise by about 6-7%.

Paweł Sionko
Construction Market Analyst, PMR

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