Bloomberg News

Polish Output Jumps 7.7%, Suggesting Rate Cut Not Needed

October 19, 2011

(Updates with economist’s comment in fourth paragraph, zloty, swaps in fifth.)

Oct. 19 (Bloomberg) -- Polish industrial-output growth exceeded forecasts for a second month in September, showing the economy isn’t yet suffering from the euro-area debt crisis and bolstering expectations interest rates won’t fall.

Industrial output grew 7.7 percent from a year earlier, after increasing 8.1 percent in August, the Central Statistical Office in Warsaw said today. The figure compared with the median estimate for a 5.2 percent increase in a Bloomberg survey of 22 economists. August’s production reading had also topped economists’ median forecast of 2.7 percent. September output rose 13 percent from the previous month.

The government has kept its 4 percent forecast for economic growth this year and next even as the European Bank for Reconstruction and Development cut its forecast for Polish growth to 2.2 percent next year and said economies in eastern Europe would slow “substantially” on spillover from the euro area’s woes. Poland’s central bank left the benchmark seven-day reference rate unchanged this month at 4.5 percent.

“Today’s data are pretty optimistic,” Maja Goettig, chief economist at Bank BPH in Warsaw, said by phone. “The slowdown is coming, but figures like this suggest things might not get as bad as we thought.”


The zloty strengthened after the release and traded at 4.3318 per euro at 2:40 p.m. in Warsaw, up 0.4 percent on the day. Polish two-year interest-rate swaps, which investors use to lock in borrowing costs in the future, erased a decline following the report to trade unchanged at 4.6 percent, up from 4.58 percent before the release.

“In the short term, we should adopt a wait-and-see stance that may stretch into the beginning of next year,” central banker Andrzej Bratkowski said in an interview on Oct. 17. “The probability that we will see a rebound in GDP growth after two or three quarters is greater than the likelihood that the slowdown will continue.”

Poland’s manufacturing growth slowed more than forecast in September as export markets weakened. The purchasing managers’ index fell to 50.2 from 51.8 the previous month, according to a survey published Oct. 3 by Markit Economics for HSBC Holdings Plc. Any reading below 50 marks a contraction. The outlook for growth in Germany, Poland’s largest trading partner, is worsening as companies cut their sales forecasts and foreign orders decline, the Bundesbank in Frankfurt said on Oct. 17.

Producer prices, an early indicator of inflationary trends, rose 8.1 percent from a year earlier in September, compared with the median forecast of 7.5 percent in a Bloomberg survey of 20 economists, the statistics office reported today. Producer prices rose 1.4 percent from the previous month.

--With assistance from Barbara Sladkowska in Warsaw. Editors: Alan Crosby, David McQuaid

Katya Andrusz in Warsaw at

To contact the reporter on this story: Dorota Bartyzel in Warsaw at

To contact the editor responsible for this story: Balazs Penz at

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