The Forward Looking Indicator (WWK), which provides advance information on future trends in the economy, rose by 0.8 points in December this year, its fifth consecutive month of improvement. The WWK trends of recent months give hope for a recovery of the economy in 2024. There are, of course, a number of uncertainties and constraints that could hamper this expected growth. One such risk is the possibility of inflation rebounding in 2024. This is because the main driver of the expected economic acceleration will be consumption supported by both budgetary spending and high wage growth. A rebound in investment will not be expected until the end of 2024 at the earliest, as EU funds come on stream, the economic recovery consolidates and the climate around the Polish economy improves.
December this year again saw a slight increase in the rate of inflow of new orders to manufacturing companies. However, this improvement mainly concerned orders from the domestic market. Orders from foreign contractors recorded a second month of decline, reflecting the scale and weakness of demand in our immediate economic environment. Prospects for a rapid improvement in the activity of the European and US economies are not the best, with growth rates projected for 2024 for these countries not exceeding 1% per annum. By industry, food demand is recovering fastest, with machinery and equipment manufacturers experiencing the largest declines in orders, reflecting the weak health of sectors producing mainly capital goods. Investment is key to consolidating the current seeds of recovery. Industrial labour productivity has been declining steadily for more than two years, with average industrial capacity utilisation at very high levels, close to historical highs. Practically speaking, this means that some companies will not be able to meet rising demand without early investment in more efficient machinery and equipment.
Assessments of the financial situation of manufacturing companies have worsened somewhat. Among the surveyed managers, the proportion of companies that believe that the financial state of the companies they manage is systematically deteriorating still prevails (by 14.5 percentage points). Even worse are the companies’ predictions regarding the state of finances in the coming months, where the advantage of pessimists over optimists reaches 20 percentage points. These opinions are likely to be influenced by the higher rates charged on labour costs introduced from the new year.
Source: BIEC
