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Export growth markedly outpaces imports in January


Although figures for a single month do not warrant far-reaching conclusions (especially since they are preliminary estimates that will be adjusted later in the year), the high increase in exports in January is very good news. The strength of external demand is a result of continued economic upturn in Western Europe, particularly in Germany, which is the main recipient of Polish exports (the share of Germany in Polish exports of goods rose by 0.6 p.p. compared with January 2010, to 26.7%). The strong international competitiveness of Polish goods was further helped by a favourable exchange rate of the zloty to the euro. Meanwhile, the substantial slowdown of import growth in January was primarily due to a higher reference base (though it was still lower than for exports) and exceptional factors, namely increases in VAT rates effective from 1 January 2011. In our view, the prospect of tax changes was a very important driver of consumption in the final months of 2010, which also found reflection in import figures. Similarly, the slower growth of retail sales and imports in January was a consequence of price increases resulting from higher VAT rates and the effects of forward buying in late 2010. Against the general backdrop of weak import growth in January, the increase in imports from Russia appears impressive (over the past year the share of Russia in Polish imports of goods jumped by 3.3 p.p. to 14.2% from 10.9%). However, it should be noted that the result was driven mainly by a surge in the global prices of oil and commodities, which have a disproportionate impact on Polish imports from that country. The foreign trade figures for January raise hopes for a strongly positive contribution of net exports to GDP growth in Q1, which should cushion the impact of the anticipated slowdown in consumption. Coupled with the expected recovery in investment, this should be sufficient to keep the rate of economic growth above 4%.

Paweł Sionko
Construction Market Analyst, PMR

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