The coming months should see increased Polish construction activity after April output soared following a disappointing start to the year, says ING Bank. This will mainly be driven by accelerating infrastructure projects enabled by EU funds through Poland’s National Recovery Plan (KPO).
Construction activity rose by 4.5% year-on-year in April, above ING’s forecast of 0.5% and the consensus estimate of 1.3%, after severe winter weather froze output in January and February, Kallanish notes.
In recent months, doubts have arisen over whether KPO funding will be fully disbursed to final beneficiaries before the end-2026 deadline to ensure their full utilisation.
Investments financed by EU debt, including for defence purposes, through KPO loans and SAFE programme loans, will also support construction production this year, the bank says.
“With some delay, we will also see a rebound in the housing sector due to the increase in the creditworthiness of potential buyers (effects of earlier interest rate cuts, rising wages, slowing down of housing price increases),” ING writes in a note.
Polish industrial production rose 3.1% year-on-year in April, slowing from 7.5% growth in March.
“In recent quarters, stagnation trends have been visible in the manufacturing sector of our main trading partners (weak production in Germany, although orders are rebounding there). These trends are now being reinforced by disappointing readings of manufacturing PMI indices from the eurozone. Furthermore, some sectors are struggling with growing competitive pressure from China,” ING notes.
“We fear that the industrial recovery in the coming months will be moderate, and a return to a situation where production grows faster than GDP is doubtful. Poland is launching massive public and defence investments, which will revive the industry, but the activity of the defence sector, for example, may prove insufficient to immediately provide a noticeable boost to the entire industry, where we are more reliant on other infrastructure and public investments,” the bank concludes.
