Poland’s Industry Continues To Contract In February

Posted on by

I suppose industrial output numbers for Poland are not exactly the sort of thing that set most Afoe readers alight with blazing interest. They are, however, not without some significance, since one of the issues every right thinking European needs to be trying to assess right now is just how valid the “each Eastern Economy is different” actually is in reality.

Well, it is, and it isn’t is my view, since evidently there are differences, and some of them are important, but equally evidently there is one common underlying reality: an ongoing and extensive regional economic crisis. In this context the fact that Polish industrial production fell for the fifth straight month in February is not simply an incidental piece of news. It offers us and easy to understand indicator of the problem which exists, as well as providing the latest signal that the Europe’s economic crisis really is having an impact on domestic economic growth in Poland and other parts of central Europe. In fact annual output dropped by 14.3 percent in February, following a revised decline of 15.3 percent in January. Output was however up 2.7 percent month on month.

Industrial output is now declining across the export oriented economies of central Europe, including the Czech Republic, Slovakia and Hungary, as exports to the region’s main trading partners in western Europe drop and investment plans are halted, slowing economic growth and pushing up the jobless rate. We also learned yesterday that employment dropped in February ny 0.2 percent over February 2008, registering the first annual decline since 2004. At the same time, wages increased 5.1 percent, their lowest increase in 27 months.

Another interesting detail here, for those who study the details of economics, is that theindustrial output numbers are not that far removed from the picture painted in the Purchasing Managers’ Index (PMI) since the PMI for the Polish manufacturing sector rose in February coming in at 40.8 (from 40.3 in January). Thus the slight improvement in February’s situation was already evident in the PMI. Analysts at the time said the February PMI figure more than likely marked a rebound after earlier sharp declines and suggested a weaker zloty may have helped cushion perceptions of the downturn by making exports cheaper.

This entry was posted in A Fistful Of Euros, Economics and demography by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

4 thoughts on “Poland’s Industry Continues To Contract In February”

  1. I’m interested in similar analysis for Romania and Bulgaria. I keep reading (this blog included) that they are in far worst shape than everybody else, but I failed thus far to find the quantitative arguments to prove it.
    Does this opinion reside with cold numbers, or just on the lack of data?

  2. Hello Rope,

    “I’m interested in similar analysis for Romania and Bulgaria.”

    Well I am preparing a piece on Romania. There is data, from Eurostat. I posted on Romania after Q4 2008 results came out. It is pretty clear there is a sharp contraction going on. I am going to post again here soon, but in the meantime I have plenty of earlier posts on my Romania Economy Watch blog.

    Bulgaria is not in such a different situation, but there is less data in this case. They even provide much less to Eurostat, but then, this is never a good sign. If they don’t put a price on that nice laptop you see in the shop window, it is rarely becuase it is going to be cheaper than you expect.

  3. Hello Edward,

    I tried to email but I could not find an email adress :).

    I am waiting your piece on Romania.

    The contraction will be extremely sharp in the first 2 quarters, at least based on the production figures I’m seeing for January.

    Romania will most likely receive EUR 19 bln, and new estimates are:

    GDP increase – -4%
    Budget Deficit – -4.7%

    Decent figures, but a bit optimistic. The risks of RON devaluation is mostly the biggest threat of financial stability; the IMF agreement will mostly likely bring a reduction of minimum mandatory reserves for EUR, in order to kickstart the credit.

    Unfortunately, I don’t think that internal consumption could help anymore, as it is time to export more. Unfortunately, the bubble memories of 2007 – 2008 are still very vivid.

    Regards,

    Mihai

  4. Edward and Mihai,

    Thank you for the updates, and also looking forward to your future posting. I wish there were more blogs like this one, where opinions based on numbers are aired without political agenda or bias.

    Thanks!

Comments are closed.