Decline in industrial production in the first quarter of 2023

Industrial production in March 2023 continued to record positive monthly changes, but also a decline on an annual basis for the fifth consecutive month. Specifically, the volume of industrial production compared to the same period in 2022 fell by 0.7 percent (calendar adjusted) in March. Compared to February, seasonally and calendar adjusted industrial production achieved a growth of 1.2 percent.

Quarterly, in the first quarter of 2023, a real decline in industrial production of 1.7 percent was recorded compared to the same period in 2022 (calendar adjusted), while on a quarterly basis, a growth of 1.4 percent was recorded (seasonally and calendar adjusted).

On a monthly basis, according to the main industrial groupings (GIG), a positive change in March was achieved in the category of Non-durable consumer goods (+7.4%) and Intermediate goods (+1.0%). Negative changes were recorded in the categories of Durable consumer goods (-4.9%), Energy (-4.9%), while Capital goods recorded a decline compared to February of 3.7%.

Compared to the same period last year, a modest decline in March was recorded in Energy (-0.8%), and production also decreased in the categories of Durable consumer goods (-6.2%) and Intermediate goods (-7.5%). On an annual basis, Durable consumer goods have been recording a continuous decline since September 2022, while the production of intermediate goods has been declining for the fifth consecutive month. On the other hand, growth was achieved in the categories of Non-durable consumer goods (+4.3%) and Capital goods (+5.8%).

According to NKD, calendar adjusted industrial production increased in Electricity, gas, steam, and air conditioning supply by 2.9 percent on an annual basis, while in Mining and quarrying, the volume of industrial production decreased by 5.6 percent and in Manufacturing, which accounts for approximately 85 percent of total industrial production, by 1.4 percent.

Manufacturing industry, in the period from January to March 2023, fell by 2.2 percent compared to the same period in 2022. The decline during this period was contributed by, for example, activities in the Production of chemicals and chemical products (-29.1%), Production of textiles (-22.6%), Production of computers and electronic and optical products (-19.0%), Production of tobacco products (-16.5%) and Production of furniture (-15.9%). Growth was recorded in only 11 out of a total of 24 activities in the manufacturing industry.

In the outlook for this year, negative risks prevail as industrial production continues to be under pressure from still high input costs, supply-side constraints, and reduced demand (the trend of slowing demand for industrial goods began at the end of 2022 in the largest economies) and economic uncertainty. For the entire year of 2023, the growth rate of industrial production volume will slow down compared to the 1.6 percent achieved in 2022.