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The Warsaw Voice » Business » September 2, 2009
ECONOMY
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Brighter Outlook for Exporters
September 2, 2009 By A.R.    
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Business is likely to pick up for Polish exporters in the next few months-unless the country's main EU trading partners plunge deeper into recession, according to analysts at the economy ministry.

Exports play a significant role in the Polish economy and have been among the most important factors behind the country's economic growth over the past several years. But at this time of financial crisis, the risk associated with the sale of goods and services on foreign markets has increased, experts say.

Polish exporters are helped by a weaker zloty, which has made Polish exports more competitive. However, this effect cannot fully offset the latest downward trend, experts say, which stems from a drop in consumption and investment in other European Union countries that are Poland's main commercial partners. Polish exports have slowed sharply in recent months due to market instability, falling demand in most EU countries, and volatile exchange rates.

According to preliminary data by Poland's Central Statistical Office (GUS), the value of the country's exports in the first quarter of this year totaled 22.7 billion euros, shrinking by 20.3 percent from the same period last year. The value of imports, at 24.6 billion euros, was 27 percent lower year on year. The trade deficit, at 1.9 billion euros, was 1.2 billion euros lower than in the first quarter of last year. GUS experts say Polish exports and imports have slowed down because both domestic and foreign demand has weakened significantly. The trade deficit has narrowed because the zloty has depreciated against the euro and dollar.

According to preliminary figures by the National Bank of Poland, exports were worth 23.2 billion euros in the first quarter, going down by 23 percent year on year, while imports totaled 23.7 billion euros, shrinking by 29 percent. The merchandise trade balance was negative at 0.5 billion euros, against 3 billion euros a year earlier.

Exports increased to both developed and developing countries compared with the first quarter of last year, while the share of Central and Eastern European countries declined.

In imports, the share of developing countries increased, while the contribution of developed and Central and Eastern European countries decreased. Exports to other EU countries accounted for 80.3 percent of the total value of Poland's exports. Imports from these countries accounted for 59.6 percent of the total value of Poland's imports. Exports to Italy, France, the Netherlands, Britain and Germany gained momentum, and the same goes for imports from markets such as China, the United States and South Korea.

Analysts at the economy ministry predict that Poland's exports statistics will improve in the near future.

"Exports should pick up in the coming months unless there is a deeper recession and a further slowdown in demand on the EU's main markets, especially Germany," reads a report by the Economy Ministry's Department for Analyses and Forecasts.

The economy ministry predicts that Poland's exports in all of 2009 will reach around 101 billion euros, roughly 12 percent less than in 2008. Imports are projected at 121 billion euros, or 13 percent less than last year. The merchandise trade deficit is projected at around 20 billion euros, down by 4.7 billion euros from 2008.

However, the condition of Polish exporters will depend not only on the country's economic performance but also on what measures are taken to support exports. "Exports are one of the driving forces behind Poland's economic growth. This explains why we should promote Polish businesses operating on international markets," said Deputy Prime Minister and Economy Minister Waldemar Pawlak at a conference of the Association of Polish Exporters in Warsaw in June.

According to Pawlak, recent changes to the foreign exchange law make it easier for Polish companies to do business abroad. "The new regulations allow businesses to keep their accounts in convertible currency without restrictions or the need to convert funds into zlotys," Pawlak said. "This makes payments between business partners easier and helps exporters reduce currency risk."

Participants in the conference called for new measures to support Polish businesses operating in export-oriented sectors such as the automotive industry, consumer electronics, aviation, food processing, biotechnology, measurement equipment production, information technology, telecommunications, business services, and research and development.

Exporters argue that promotional activities aimed at selected sectors should focus on markets that offer the greatest potential for the development of Polish exports. These include markets across Poland's eastern border such as Russia, Ukraine, Kazakhstan and Belarus, exporters say.

According to exporters, ministries responsible for the country's export expansion should better coordinate their efforts. This especially applies to projects overseen by the economy ministry and the foreign ministry. Exporters are also calling for an accelerated absorption of EU funds set aside for innovation.

Until recently, rapidly growing exports were a key factor behind Poland's economic growth. As a result, the country was able to reduce unemployment and improve the standard of living. The international financial and economic crisis has hurt Poland's exports. But the downward trend can still be reversed and exports will start growing again if decision makers pursue the right export promotion policy, experts say.
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