Production expectations remain deeply below pre-pandemic average

Today, we continue to look at soft indicators. Within the Economic Sentiment Survey companies evaluate their production expectations on a monthly basis. It seems that since the beginning of 2022 productions expectations have declined and remain at a subdued level compared to the pre-pandemic five-year average. Prior to 2020, the average balance of answers was hovering between 15 and 25 for most of the time. After the pandemic, production expectations for months ahead briefly recovered and reached similar levels on the course of 2021. Since the outbreak of the war, however, CEE countries seem to have switched to lower gear. The average balance for the last three years is barely 8.4 in CEE8. Looking ahead, we do not see any trigger in the short run that could restart the production engines in the more meaningful way. Increasing uncertainty and the threat of increase in protectionism are growth negative factors.