Poor December industrial output figures boost support for interest rate cut

Industrial output plunged in December and producer prices continued to fall as tight borrowing costs choked demand, data showed on Friday. The Central Statistical Office (GUS) said unadjusted industrial output was down 4.8% year-on-year in the last month of 2001, against November's 0.6% slip. Output over the year as a whole fell by 0.2%, after a rise of 7.1% in 2000, putting Poland in its deepest industrial recession since the early 1990s. The annual Producer Price Index (PPI) stayed in negative territory, down 0.3% in December from minus 1.0% in November. "We still have deep recession in the manufacturing sector and the economy was in a very poor condition in D ecember," said Krzysztof Rybinski, chief economist at Bank Zachodni WBK in Warsaw. The data corroborated earlier car industry figures showing that December was the worse single month since November 1995, with sales for 2001 as a whole down by nearly a third. Analysts said the weak data, which despite a shorter working month were worse than expected, would bolster the case of dovish members of the Monetary Policy Council (RPP) and lead to a rate cut at its January 29-30 meeting. (Reuters)