Polish companies worried conditions were worse in Q2, central bank says

WARSAW (Reuters) -Polish companies feared business conditions were getting worse in the second quarter, with rising costs of raw materials and supplies seen as the most important barriers to growth, the central bank said.

However, the impact of those factors was clearly decreasing, as was the impact of other barriers such as changing regulations, high taxes and fees, or high labour costs, the National Bank of Poland said in a survey published on Friday on business sentiment in the April-June quarter.

"The negative impact of low or declining demand remained unchanged. However, uncertainty, related in part to the geopolitical situation, was a barrier that clearly gained significance," the central bank said.

While companies fretted about the broader outlook, they reported a significant weakening of price pressures. The percentage of companies which raised their selling prices fell, resulting in a price pressure index at its lowest level in five years.

Polish companies also reported a decline in wage pressures, with the percentage of enterprises indicating its intensification falling to the lowest level since the end of 2020, the report showed.

The report also showed that the share of companies planning to continue ongoing investments had increased, while the percentage of those initiating new investments had decreased, both quarterly and yearly.

Greater investment optimism was noted in the public sector, while it was slightly lower in the private sector.

"The plans of foreign companies were particularly pessimistic, with plans to reduce rather than increase their investments within the quarter," the central bank said in the report.

(Reporting by Pawel Florkiewicz; Editing by Kim Coghill)