Polish exports expected to continue to grow in 2012 and 2013 despite European economic slowdown

Polish exports continue to be one of the key drivers of the country’s economy, despite the economic slowdown experienced by Poland’s major trade partners. Net exports’ contribution to GDP growth increased to +2.6 pps in Q2 2012 from +0.7 pp in Q1 2012 and +0.7 pp in FY 2011, the statistics office GUS announced, with the caveat that “net exports’ positive influence on the pace of economic growth [in Q2] was much greater than in previous quarters, which resulted from a decline of imports combined with exports growth that was (slightly) lower than in previous quarters.”

“Net exports presently remain the main factor sustaining the [Polish economic] growth, particularly after a good export sales result for July,” the Polish Confederation of Private Employers PKPP Lewiatan writes in a press release in early October. Exports are all the more important as one should not count on Poland’s internal demand, be it consumption- or investment-related, as contributor to GDP these days, the PKPP Lewiatan experts underscore.

Poland’s exports are expected to continue to boost the country’s overall economic growth, even if to a decreasing extent: the net exports’ contribution to GDP is forecast at +1.3 pp in 2012 and +0.2 pp in 2013, according to the Institute for Market, Consumption and Business Cycles Research (IBRKK).

Polish exports seen growing at slower rate this year, but regaining momentum in 2013

Understandably enough, given the current economic situation, Polish export growth has considerably slowed down this year, with its FY 2012 rate expected to be roughly half the rate seen last year: at 6.0% compared with 13.6% in 2011 (percentage values y/y, based on EUR-denominated volumes), according to Export Credit Insurance Corporation (KUKE). In absolute terms, Poland’s 2012 exports are expected to amount to EUR 148.5 bln or PLN 619.4 bln (increasing from EUR 136.7 bln or PLN 558.7 bln in 2011), KUKE wrote in a press release at the beginning of October, having raised the forecast value by roughly EUR 1 bln compared with the previous month’s forecast.

New Export Orders Index for Polish manufactured goods included in HSBC Poland Manufacturing PMI

source: HSBC, Markit Economics, HSBC Purchasing Managers’ Index (PMI) for September 2012

Polish exports growth is expected to speed up again in 2013, responding to the “improvement of economic situation at some of our major recipients [buyers of Poland’s exports],” KUKE experts write, forecasting a 8.1% y/y growth of Polish exports denominated in the euro (to EUR 160.6 bln) and a 3.4% y/y growth of exports denominated in the zloty (to PLN 640.6 bln). KUKE is not the only financial institution anticipating an acceleration of Polish exports growth next year: Nordea Bank expects PLN-denominated exports to increase 4.5% y/y in 2013 after growing by 1.8% y/y in 2012, while IBRKK eyes a 5.8% growth next year after a 3.9% growth this year.

Eurozone crisis may constitute opportunity for Polish exporters to increase their share in European market

“The crisis in the euro zone, paradoxically, might be advantageous for our [Polish] exports and bring about an increase of their share in the European market,” IBRKK head Ryszard Michalski told PAP in an interview. “Polish entrepreneurs offer goods of an ever increasing quality at prices that are lower than brand-name products, which might incline eurozone consumers to buy Polish products,” Michalski said.

Poland’s exports and imports in January-July 2012

source: GUS, Foreign trade turnover in total and by countries January – July 2012

„What is more, Polish exports are very diversified, and at the same time not specialized, which is why they are not very susceptible to demand breakdowns suffered by one of [Poland’s] trade partners, IBRKK chairman also said, adding that Polish exporters are looking for markets alternative to the EU one, such as members of the Commonwealth of Independent States as well as Asian and Arabic countries.

Poland’s food exports named as one of the sectors with great development prospects

Among the main sectors of Polish exports, food sector is the one enjoying a particularly fast growth, the business daily Puls Biznesu writes on October 9, citing Polish Agriculture Minister Stanisław Kalemba. Exports of Polish food are already worth EUR 16 bln a year, the daily writes, while Kalemba underscores that the 2012 surplus of food exports over imports is going to amount to EUR 3 bln.

Poland’s food export hits are meat, apples, vodka and sweets, according to the daily. “The largest [exports-over-imports] surplus is recorded in the poultry segment. In this segment, we are Europe’s number three player. When it comes to the production of apples, we are number one,” Kalemba told the daily. Polish food exports will continue to grow, yet not necessarily solely on the EU markets; Polish meat, for instance, is in increasing demand in the Far East, industry insiders are quoted by Puls Biznesu.

Relative weakness of the Polish zloty against the euro continues to support exporters

Polish export prices maintain their competitive edge over Western European products thanks to the favorable exchange rate of the Polish zloty against the major global currencies, economists agree.
„The current exchange rates of the zloty, shaped by the market [forces], are rather neutral both for the economic growth and inflation. These exchange rates are comfortable for the majority of exporters,” head of the National Bank of Poland Marek Belka told PAP in an interview dated September 26.

A similar message has been sent by another rate setter: “The [current] market exchange rates [of the Polish zloty] are absolutely safe both for inflation and for exports growth rate,” Monetary Policy Member Andrzej Kaźmierczak told PAP in an interview published on September 21.

The Polish foreign exchange rates are not expected to change considerably in the course of the coming months: PAP’s newest analysts’ survey showed that the EUR/PLN rate is expected to measure 4.13 at the end of October and 4.16 at the end of 2012, while the USD/PLN rate is eyed at 3.22 at end-October and at 3.25 at end-year (the figures being the means of forecasts by 14-16 analysts).