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The Warsaw Voice » Business » November 3, 2014
Business & Economy
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Exports Continue to Grow
November 3, 2014   
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Despite predictions, the conflict in Ukraine has not seriously hurt Polish exports.

According to preliminary data by Poland’s Central Statistical Office (GUS), exports of Polish goods totaled 105.8 billion euros in the first eight months of this year, which marked a 4.4-percent increase over the same period last year. Poland’s imports approached 106.8 billion euros during the same period and grew 4.2 percent. As a result, the trade deficit shrank to around 1 billion euros from nearly 1.2 billion euros a year earlier. Exports to the European Union rose by 6.7 percent, to 81.1 billion euros, with the growth twice as fast in the case of eurozone countries (about 8 percent) as for the rest of the EU (about 4 percent). Sales to developed non-EU markets increased faster than average, rising by 5.3 percent to around 7.4 billion euros. At the same time, imports fell by 11.1 percent to 7 billion euros, resulting in a transformation of the around 900-million-euro deficit recorded in the first eight months of last year into a 350-million-euro surplus.

Poland’s trade balance with emerging markets and less well developed countries looks much worse. Poland’s exports to these markets declined by 5.6 percent to 17.3 billion euros, while imports increased by 7.8 percent to 37.4 billion euros. As a result, the already sizable deficit widened by a further 3.7 billion euros to 20.1 billion euros. According to GUS statistics, exports to the Commonwealth of Independent States dropped by 15.2 percent to around 8.5 billion euros. Of this, exports to Russia decreased by 12.3 percent, sales to Ukraine fell by 28.6 percent, and shipments to Belarus shrank by about 5 percent. By contrast, sales of goods to other emerging markets (not including the CIS) increased by 5.8 percent to almost 8.9 billion euros in the first eight months of this year.

In terms of specific commodity groups, exports of light industry products increased by 12.6 percent, sales of farm produce and foodstuffs rose by 5.2 percent, and shipments of electrical engineering products, which dominate in Poland’s foreign trade, grew by 5 percent. On the other hand, exports of mineral products declined by 5.5 percent.

The trade results for the first eight months of this year show that the Russian-Ukrainian conflict and trade restrictions introduced by Russia have turned out to be less troublesome for Polish exporters than expected. Even though the volume of trade with Russia and Ukraine has decreased, resulting in a decreased role of these countries in the structure of Poland’s overall exports, these significant declines in trade with Central and Eastern European countries have been successfully compensated on other markets, particularly those within the European Union.

This is confirmed by a survey by the Akcenta company, a payment institution that handles international payments, currency exchange and hedging transactions for exporters and importers. In the survey, 63.8 percent of the company’s customers declared they have not felt the negative impact of the Ukraine conflict. However, a third of respondents said they have suffered losses due to the conflict. Interestingly, 2.9 percent of those surveyed by Akcenta said the conflict has had a beneficial impact on their business.

“The situation in the East is a serious problem, but it is necessary to remember that our foreign trade is focused on the European Union,” said Radosław Jarema, managing director of Akcenta in Poland.

“EU markets account for more than 75 percent of Poland’s exports and for more than 50 percent of its total imports. The [Ukraine] conflict has especially strongly hit companies whose business is in large part based on Eastern markets. There are not many such companies among our customers in Poland. Other companies have been helped by a safety net in the form of an earlier diversification of export markets,” Jarema added.

The Polish economy has previously coped with a decline in trade with Central and Eastern European countries, including Russia. In 2009, due to factors including the global economic crisis, combined with a devaluation of the Russian ruble in late 2008 and increased import duties in Russia, Polish exports to the countries of Central and Eastern Europe fell by a whopping 35 percent in year-on-year terms and imports plummeted by 37.7 percent y/y. The decline was dramatic because in previous years Polish exporters and importers recorded double-digit increases in trade with countries in this region year on year. However, the crisis of 2009 did not stop the expansion of Polish foreign trade, which in 2010 rose by 31.6 percent for exports and 47.6 percent for imports. Monika Krzywda, an analyst with Akcenta, said, “There are many similarities between the current situation and the situation in 2009. Back then the crisis affected the whole world and [Russian] import duties affected the EU as a whole. Today it is also the EU as a whole that is having problems. However, there is one fundamental difference—the situation today has a distinct political dimension, which carries much greater risks that are virtually impossible to predict.”

Despite the considerable uncertainty over developments in Ukraine, Polish exports are expected to set a record this year. According to the Export Credit Insurance Corporation (KUKE), exports could reach 159.6 billion euros for the full year, 7.2 percent more than a year earlier. And next year, as the economy improves, exports are expected to grow by 11.5 percent to 178 billion euros.

A recent report by HSBC and Oxford Economics also predicts a dynamic rise in exports from Poland. The report suggests that Poland’s exports will be growing at a rate of around 9 percent annually in the next three years. Globally, China and Mexico will report similar growth, and only Vietnam, India and South Korea are expected to do better.
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