Upbeat data in April lowers possibility of rate cuts from Poland Central Bank

Poland’s industrial production data released yesterday showed strong growth in April. According to the Central Statistical Office of Poland, April industrial production grew 6% y/y, confounding expectations for a decline of 3.4 percent. Industrial production decreased 3.1 percent on a monthly basis, but slower than a 5.3 percent fall forecast by economists. A separate data released showed that the country earlier posted a strong wage data for April.

The improved annual reading came in line with retail sales. Poland's retail sales grew 5.5% y/y in constant prices in April, up from 3% recorded the previous month and suggesting that private consumption can remain a major pillar of robust economic growth.

The April data appeared to reverse the picture of growth moderation which had been building up since early 2016. Analysts now claim they are more confident Polish GDP growth will perk up in the second quarter. The economy contracted 0.1% in quarterly terms in January-March. Data is unlikely to provide the National bank of Poland reason to change its dovish stance.

“The breakdown of the data showed that the pick-up in the year-on-year industrial production growth rate was driven by Poland’s key manufacturing sector. It looks like economic growth rebounded at the start of the second quarter … to around 3.5% y/y in April, up from 3.0% y/y in the first quarter,” notes Capital Economics in a report.