Central European manufacturing downtime since a few months ago eased in June as economies reopened, but the sector is still on a way to return into growth. The manufacturing sector plunged by reason of the pandemic bringing factories shutdowns, mainly in March and April, and start to recover in May. Although economists say the worst situation has passed, governments and central banks in Hungary, Poland and the Czech Republic predicted the GDP will shrink by 3-8% this year.
Ryszard Florek, chief executive of Polish window manufacturer Fakro said the beginning of the pandemic was difficult with a lot of absences and a plunge in export orders. Now they have no declines in Poland and resuming export sales.
IHS Markit’s PMI for manufacturing in Poland inclined to 47.2 in June from 40.6 in May, and for the Czech Republic is up from 39.6 to 44.9. PMI readings below 50.0 are showing contraction in activity.
For Hungary, the seasonally adjusted PMI from HUPMI=ECI hiked from revised 40.7 in May to 47.0 in June. The surveys result in a mirrored situation in Hungary’s main trading partner, Germany. Although Hungarian PMI shows some improvement but still far from the V-shaped rebound story, Peter Virovacz, Senior Economist at ING in Budapest opined. Even the improvement is there, but overall the situation is still far from out of the woods.
Czech’s J&T Banka survey found most entrepreneurs, top managers and firms did not expect a speedy economic recovery. More than a third of total respondents also saw a rebound will be taking multiple years. As some sectors had been directly affected by the restrictive measures, a rebound is not going to be speedy, and many companies will experience lower demand in the following months.
