Actual (February): -23.4% y/y Consensus: -19.0% y/y Previous (January): -23.3% y/y Industrial output dropped significantly again. Reasons behind are still the same: falling demand in the euro zone and tightening credit conditions. The link between exports and production is obvious: the first one fell by 22.2% y/y, the second one by 23.4% y/y. Total (36,32 EUR, -2,01%) figures were negatively affected mainly by decrease of basic metals production (-46.6% y/y) and car assembly (-27.9% y/y). An index of new orders fell by 24.7% y/y in February; however, car-scrapping subsidies in Germany, Slovakia and other EU countries can soften those negative figures in 2Q. Industrial firms are forced to cost reduction resulting in lay-offs (7.3% y/y) and that is the link to the domestic demand (see comment about retail sales in February). Today’s figures left CNB an option to cut interest rates by 25 bps in May.