Industrial output figures could be first tentative signs that the recession is over

Industrial output unexpectedly perked up and producer prices hit a 13-month high in June, but analysts believe it is still far to early to say whether the year long period of stagnation has come to an end. Industrial production rose by 3.3% in June and is 2.2% higher than a year ago, as compared to expectations of a 0.6% year-on-year fall. "We are pleasantly surprised by such a strong rise in output as we had expected a worse result," said Katarzyna Zajdel-Kurowska, an economist with Bank Handlowy in Warsaw. Dariusz Rosati, a member of the Monetary Policy Council (RPP) said that it was unclear whether these figures, which had shown a good deal of volatility over the last few months, are a sign that the economy was picking up. Analysts say the increase could be attributed to higher exports, as foreign sales absorb 40% of industrial output. Interest rates have been halved over the past year, but government officials say they are still too high. RPP members blame the economic problems on the slow pace of reforms. Despite the recovery in June, total industrial output for the first half of 2002 is still 1% lower than last year. (Reuters; Rzeczpospolita, pp. A1, B1) M.M.