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Foreign trade deficit at €2.7bn in Q1


Polish exports of goods were worth €33.7bn in the first three months of 2012, while imports totaled €36.4bn, according to preliminary data from the Central Statistical Office (GUS). This translates into a nominal increase of 1.3% y-o-y and a decline of 0.4% y-o-y, respectively. As a result, the country’s foreign trade deficit amounted to €2.7bn, compared with €3.4bn in the corresponding period of 2011.

Poland’s trade balance with the countries of the European Union as well as with the wider category of developed countries improved solidly over this period, showing surpluses of €5.5bn and €4.8bn, respectively. And so did the balance with developing countries, with the deficit narrowing by 10% to less than €4.5bn. By contrast, the deficit with the countries of Southern and Eastern Europe increased by nearly half to €3.1bn.

Of Poland’s main trading partners, by far the highest increase in exports was to Russia (up by 32.6% y-o-y), followed by Ukraine (up by 17.3% y-o-y). Exports to three other countries increased in the low single digits: to Great Britain by 3.8% y-o-y, to the Czech Republic by 3% y-o-y, and to the Netherlands by 2.7% y-o-y. Exports to Germany decreased by 0.7% y-o-y, to France by 1.6% y-o-y, to Hungary by 3.6%, to Sweden by 7.8% y-o-y, and to Italy by 9.4% y-o-y.

The biggest increase in imports was also with Russia (up by 35.5% y-o-y), followed at a big distance by the United States (up by 3.1% y-o-y), the Czech Republic (up by 1.6% y-o-y), and China (up by 0.8% y-o-y). Imports from six other top ten countries were lower than in January-March 2011. Thus imports from the Netherlands declined by 1.5% y-o-y, from South Korea by 1.6% y-o-y, from Germany by 3.8% y-o-y, from France by 11.6% y-o-y, from Italy by 12.3% y-o-y, and from Great Britain by 17.9% y-o-y.

By way of comparison, in 2011 as a whole the trade deficit amounted to €14.7bn, i.e. approximately 3.9% of GDP.

Foreign trade in Poland (%, y-o-y), 2004-2011 and Q1 2012

The reduction of Poland’s trade deficit registered in the first quarter of 2012 is primarily due to a dramatic slowing of imports, which were 0.4% lower in January-March than in the same period of 2011, according to GUS data. While exports also weakened during Q1, they remained just inside positive growth territory with an increase of 1.3% y-o-y.

In our view, the meagre rate of export growth is a result of the crisis in the eurozone and the consequential weakening of external demand. The significant slowing of imports could be a sign of flagging domestic demand, but it could also reflect a loss of market share for imported goods as Poland-made products enjoyed an increase in their competitiveness, both domestically and internationally, thanks to a depreciation of the zloty.

We expect the exchange rate of the zloty to continue to support domestic production in the coming months. Although the problems of the eurozone are far from over, we expect foreign trade to accelerate in the second half of the year due to a lower base of comparison. According to our forecasts, in 2012 Polish exports of goods will increase by 6.2% and imports by 5.5%. As a result, the foreign trade deficit will amount to €14.6bn, i.e. about 3.7% of GDP.

Paweł Sionko

Senior Economist

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