Polish industrial-output growth slowed in March to the lowest rate since November 2009, suggesting the European Union’s biggest eastern economy is losing strength and damping calls for higher borrowing costs.
Production rose 0.7 percent from a year earlier after increasing 4.6 percent in February, the Central Statistical Office in Warsaw said today. That compares with the 4.4 percent median estimate in a Bloomberg survey of 30 economists. Output rose 10.7 percent from the previous month.
Economic growth in Poland, the only EU member to dodge a recession in 2009, will slow to 2.5 percent this year from an estimated 4.3 percent in 2011 as the euro debt crisis curbs export demand, the government forecasts. Today’s data, along with wage and employment figures, “should be enough” to decide whether to leave interest rates unchanged for an 11th month in May, central banker Anna Zielinska-Glebocka said April 14.
“This isn’t good,” Elzbieta Chojna-Duch, a member of the central bank’s rate-setting Monetary Policy Council, said today in an interview with TVN CNBC. “In the context of such weak data, it would be strange” if borrowing costs were increased at the council’s next meeting on May 9, she said.
The zloty weakened after the data release to 4.1893 per euro at 2:45 p.m. in Warsaw, down 0.1 percent from yesterday. The two-year government bond yield dropped 4 basis points to 4.69 percent, from 4.73 percent before the announcement.
The price of three-month forward-rate agreements, used to speculate on interest rates through July, dropped to 11 basis points above the Warsaw Interbank Offered Rate today, down 8 basis points, a sign investors now think monetary tightening is less probable over the next three months.
“This gives even more time and should make it easier for the MPC to delay the rate-hike decision,” Piotr Kalisz, chief economist at Citigroup’s Bank Handlowy unit in Warsaw, said by phone. “We’ll have hawkish rhetoric but rates will remain on hold” throughout the year.
Hiring at companies with more than nine workers fell 0.1 percent from the previous month in March, while average gross wages rose 3.8 percent from a year earlier after a 4.3 percent surge in February, the statistics office reported yesterday.
Producer prices rose 4.5 percent from a year earlier, slowing from a revised 6 percent advance in February, the statistics office said in a separate report. That’s below the 4.8 percent median forecast of 21 economists in a Bloomberg survey. Factory-gate prices rose 0.1 percent from February.