Poland's April construction output decline raises investment concerns (opinion)
Poland’s construction output dropped 4.2 percent year on year in April, significantly below market expectations of a 0.9 percent decline, dampening investment sentiment. Economists expect sector improvement in the second half of 2025, despite current weakness.
"Construction output in April remained negative, larger than in March and February, and the biggest drop so far this year. The data were a big disappointment against the market expectations," chief economist at Bank Pocztowy Monika Kurtek wrote in an e-mail to PAP Biznes.
She noted that Easter holidays might have limited workdays, and that favourable weather did not boost activity. Kurtek added that the decline in residential construction persists, and infrastructure investments funded by EU money have yet to show strong revival.
However, she believes a recovery is approaching and expects construction output to turn positive in the second half of the year.
Economists at ING BSK highlighted that the deepening year-on-year decline partly reflects a higher base from last April and a slow start to public investments.
"As in March, the data contain mixed signals about the beginning of the investment cycle from national recovery plan KPO and structural funds. We do not see an equal systematic increase in both divisions, this is infrastructure construction and specialised works, which could indicate that public investment is taking off," they wrote in an e-mail.
"Rather, we see chaotic fluctuations related to base effects and alternating improvement and deterioration in these sectors, in month on month deseasonalised terms," they added.
ING expects the investment rebound to shift toward the second half of 2025, with a possible peak in public investments in 2026.
They also see the data supporting further Poland's central bank NBP rate cuts later this year.
mBank experts assessed on X that April's construction output was disappointing but not an extreme surprise, noting that seasonally adjusted data showed stability compared to March. They maintain that the second half of the year should bring improvement.
Bank Pekao analysts pointed out that the tug-of-war between falling residential construction and rising infrastructure results in an overall flat production level compared to last year.
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On Thursday, Poland's stats office GUS reported that the construction and assembly production in April fell by 4.2 percent year on year, while rising by 5.6 percent month on month.
The PAP Biznes consensus was for a 0.9 percent year-on-year decrease and a 9.0 percent monthly drop.
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