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Foreign trade in 2000


Based on the 'Poland 2000' Report published by Polish Market Review.


For a long time Poland has had great trouble maintaining its foreign trade balance. In recent years the huge trade deficit was mainly due to the inflow of capital goods to the country, such as machinery imported by foreign companies to service their investments and cars and luxury goods to satisfy booming consumer demand. In 2000 that negative trend has been reversed and exports began to grow faster than imports. Tight monetary policy aimed at dampening consumer spending and reducing the deficit on the current account in 2000 turned out to be effective. High interest rates froze consumer demand and resulted in a slower growth rate of imports that, in conjunction with rising exports, have improved the current account balance. In addition, high interest rates and falling domestic demand were forcing Polish companies to manufacture products for export. Higher export growth was accelerated by the improving economic situation in EU countries and greater efficiency in Polish companies due to the restructurizing and privatization processes. The trade deficit in 2000 was USD 17.28 bln (10.8% of the GDP), 6.5% lower than in 1999 (in USD value).


In 2000 exports totaled USD 31.65 bln/PLN 137.9 bln and rose in nominal terms by 15.5% (in USD) and 26.8% (in PLN) in comparison to 1999. The higher than average dynamic showed exports to CEE countries up by 17.7% (in USD) and of which the greatest increase was in exports to CEFTA countries, up by 19% in 2000 (in USD). Exports to developing countries rose by 10.2% (in USD) and was the area with the lowest dynamic in 2000. In terms of regions, 76.3% of exported goods went to developed countries, a share that has not changed in comparison to 1999. The share of exports to the EU in the total value of exports fell in comparison to 1999 from 70.5% to 69.9%. Poland is more and more active in CEE countries and this is reflected in its rising share in trade with these countries. In 2000 the share of CEE countries in Polish export increased from 17% in 1999 to 17.3%.


In 2000 imports accounted for USD 48.9 bln/PLN 213.1 bln and rose in comparison to 1999 by 6.6% (in USD) and 16.8% (in PLN). The main directions of Polish imports have not changed in many years. The highest proportion of imports still come from developed countries - in 2000 70.9% of all imported goods came from developed countries, but was somewhat lower then the 1999 figure of 74.1%. The highest growth (in USD by 39.3%) was shown in imports from CEE countries, and consequently the share of this group in the total value of import increased from 14.2% in 1999 to 18.5% at the end of 2000. Imports from developing countries fell (in USD) by 4% and its share in total value of imports fell to 10.6%.


A negative balance in trade in 2000 was addressed in all groups of Poland's trade partners. The highest deficit in trade was noted with developed countries and amounted to USD 10.5 bln, of which EU deficit amounted to USD 7.8 bln.


For nine years Germany has been Poland's most dominant trade partner. In 2000 Germany's share of both exports and imports fell but were still dominant, with 34.9% of exports and 23.9% of imports. In 1999 the figures were 36.1% and 25.2% respectively. Russia fell to ninth position with 2.7% of share of total exports in 2000. Prior to the Russian financial crisis Russia always ranked 2nd or 3rd. In terms of imports, Russia ranked second in 2000, mainly due to rising costs of imported fuel and gas. Russia's share in Polish imports increased in 2000 to 9.4% from 5.9% in 1999. In USD the value of exports to Russia increased by 21.4% to USD 862 mln and imports rose by 72.6% to USD 4.6 bln. A positive trend in trade with Russia is that if natural gas and oil trade is not counted, Poland had a trade surplus after eleven months amounting to USD 310 mln. The trade deficit with Russia in 2000 amounted to USD 3.76 bln. Above average growth was noted in exports to the USA, Sweden, France, Belgium and Russia. Moreover, imports to Russia, USA and China increased significantly in 2000. In 2000 trade turnover with the ten main partners accounted for 71.4% of export and 69.4% of import. In 1999 these figures were 71.2% and 68.3% respectively.


At the end of December 2000 the current account deficit reached USD 9.9 bln, almost USD 1.7 bln lower than in the same period in 1999. This large reduction was the result of a lower trade deficit in 2000 (USD -13.1 bln as compared to USD -14.4 bln in 1999) and the rising value of unclassified transactions on the current account (USD 4 bln in comparison to USD 3.6 bln). The falling trend of the current account deficit shows improvements on the road to recovery of the external balance of the Polish economy. On the one hand this is the result of increasing expansion and better economic situation in EU countries and the USA leading to the expansion of Polish exports, and on the other hand credit goes to the tight monetary policy and external shocks that limited domestic demand and growth of imports. The deficit on the current account at the end of December 2000 amounted to 6.2% of the Polish GDP and fell from 7.4% in 1999. The external debt of the Polish economy was financed from direct and portfolio investment. 2000 was a very good year in terms of the value of direct investments, which over the whole year accounted for USD 9.3 bln net (in 1999 the analogous figure was USD 6.4 bln). This huge influx was augmented by the large privatisation projects carried out in 2000 (TP S.A., PKN Orlen and Pekao S.A.). High interest rates, very attractive for foreign investors, attracted almost USD 1 bln more than in 1999. The total value of portfolio investments in 2000 amounted to USD 2.49 bln, of which almost 75% was located in long term debt securities. At the end of December 2000 official reserve assets amounted to USD 27.5 bln, up by USD 150 mln on December 1999 figures.

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