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Foreign trade slows sharply in Q1 but balance improves over a year earlier


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
Construction Market Analyst, PMR

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