Polish Output Accelerates, Rates May Rise Further
Polish industrial output accelerated for a second month in December as a recovery in Germany broadened and Polish wages rose, increasing the chances of higher borrowing costs in central Europe’s biggest economy.
Industrial output advanced an annual 11.5 percent from a revised 10 percent the previous month, the Central Statistical Office said today. The result was below the median estimate of 11.9 percent in a Bloomberg survey of 18 economists. Output fell 4.1 percent on the month.
“Both domestic and foreign orders are rising -- not only from Germany but also from our neighbors in central Europe,” said Piotr Bielski, an economist at Bank Zachodni WBK in Warsaw, before the data release. “We’re definitely only at the beginning of a rate-raising cycle.”
Poland joined developing nations from China to Brazil that have raised borrowing costs to keep inflation in check. Policy makers yesterday increased Poland’s benchmark rate a quarter- point to 3.75 percent, the first move since June 2008, after consumer prices jumped an annual 3.1 percent in December, close to the central bank’s upper target of 3.5 percent.
Producer prices, an early indicator of inflationary trends, grew 6.1 percent in December from the year before, the statistical office said, faster than the 5.2 percent median forecast by 18 economists in a Bloomberg survey. Producer prices rose 1.1 percent on the month.
Wage growth is putting further pressure on rates to rise. Average corporate wages gained an annual 5.4 percent in December, the statistics office reported yesterday, the fastest pace in a year.
“We’ll see wage pressures growing in the coming months,” Grzegorz Maliszewski, chief economist at Bank Millennium in Warsaw, said by phone. “Especially after Germany and Austria open their borders to Polish workers at the beginning of May.”
Germany and Austria will be the last of the EU’s 27 member states to open their borders to workers from Poland and other former communist countries in central Europe. They had demanded the longest possible transition period from regulators to ease the impact of immigration on their labor markets.
The zloty was little changed after the data release at 3.9107 per euro, up 0.3 percent on the day. The three-month forward agreement investors use to bet on interest-rate changes traded at 4.53 percent, or 45 basis points above the 3-month Warsaw Interbank offered rate, showing investors see further interest-rate increases.
Poland’s economy will probably expand 3.7 percent this year, up from 3.4 percent in 2010, according to the International Monetary Fund’s October forecasts.
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