Poland’s economic outlook indicator drops again in January, no signs of imminent recovery

The Economic Outlook Indicator (WWK), which provides early signals on economic trends, declined by 0.6 points in January 2025 compared to December, signaling ongoing economic stagnation. Despite hopes for improvement, key indicators such as new manufacturing orders, corporate investment credit, and mortgage demand show no significant recovery. Inflation remains persistently high, further dampening economic activity.

While stock market sentiment has seen a minor rebound, pushing main indices slightly higher, this uptick is not yet strong enough to confirm a sustained trend.

Among the eight components of the WWK index, three showed slight improvements, three deteriorated, and two remained unchanged. The most significant decline was observed in new order inflows for the manufacturing sector, a trend that has worsened since last spring. In January, the percentage of companies reporting declining orders exceeded those seeing an increase by more than 22 percentage points. Of the 22 industries surveyed by the Central Statistical Office (GUS), only the pharmaceutical sector reported stable demand. The hardest-hit industries include leather production, mineral processing, and metal manufacturing. Additionally, capital goods producers continue to struggle, indicating that a broader economic rebound is unlikely in the near term.

Business leaders’ confidence in their companies’ financial health also deteriorated in January, reversing a brief improvement seen in December. Managers attribute this decline to reduced sales of industrial products, leading to lower revenues, along with rising operational costs, particularly labor expenses.

The real M3 money supply, adjusted for seasonal factors, fell slightly from the previous month, accompanied by a decline in cash circulation. Demand for consumer bank credit, including mortgages, remains weak, highlighting continued caution among businesses and households amid economic uncertainty.

Source: BIEC