Top of the list even when the economy deteriorates

Following Poland’s entry to the EU, economic relations with Germany grew rapidly, mainly observed in trade and capital investment cooperation. In today’s global economic crisis, especially the worsening of the German economy, a slump in bilateral trade may be feared, a worrying state of affairs since 30% of Poland’s total exports go to the German market.

Investments are second to trade as regards significance in economic cooperation with Germany. Almost 300 German companies have invested more than EUR 1 million in Poland, the largest German investors being Metro AG, Bayerische Hypo- und Vereinsbank AG, Volkswagen AG, Commerzbank AG, RWE Plus AG, Deutsche Bank AG, and Siemens AG. There are also more than 8000 small and medium German companies active in Poland. On the other hand, Polish investments in Germany exceed EUR 700 million. It is claimed that more than 70,000 Polish businesses (around 6,000 in Berlin alone) operate in Germany, the majority of which (around 80%) are one-man businesses. Around 100 branches of large Polish construction companies are still active on the German market.
Fears stemming from the present crisis may, clearly, have a negative influence on German investors. Some are leaving Poland, e.g. RH Alurad – a manufacturer of vehicle wheel rims in Gorzyce – while others are continuing planned investments or starting new undertakings.

Access to German labour market still unresolved

Germany introduced intermediary periods restricting access to work for Polish employees up till 2009. These comprise rendering services by delegated workers in the construction and allied services sector, cleaning buildings, inventory and means of transport as well as decorating interiors. Restrictions imposed for intermediary periods do not concern service contractors pursuing jobs independently on their own account in Poland and rendering transborder services. German businesses do not approve of such a state of affairs, while the government – mainly due to social considerations – intends to prolong those intermediary periods for workers till 2011.

Solution valid for a crisis period

What is required to improve the volume of Polish exports and maintain the influx of German investments is to coordinate cooperation with national industrial chambers and local governments to streamline contacts between potential economic partners, especially within the framework of contacts between partner cities and regions. Such promoting activity is frequently the first step towards winning potential investors for the Polish market. The clearly eviden insufficient knowledge among German businesspersons about the state of Poland’s economy, the technical proficiency of Polish manufacturers and conditions of doing business in Poland clear the way for effective promotion by staging missions by German entrepreneurs and journalists to Poland.
The success of effective promotion may also be created by expanding promotion within industries with long-term prospects for Polish exports (regular publication of information in the press, presentations and exhibitions culminating in activities during international trade fairs in specific industries, setting up collective trade fairs presenting achievements particularly of small and medium Polish companies, as well as equipping the stands of firms appearing independently with national visual elements). In Germany’s case, industries with a proved export potential are agriculture and foodstuffs including dairy products, furniture, machinery, school and office articles and also assembly (mainly industrial) services.
Moreover, the current crisis may cause an increase in interest in tourist excursions to Poland, also related to sanatorium, health resort and SPA services.

Małgorzata Wejtko, First Counsellor
and Consul Bronisław Jaworski
Trade and Investment Promotion Department
Consulate General of the Republic of Poland, Cologne

Polish Market

ECONOMIC MONITOR

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• ● In December 2009 and January 2010, as in previous months in the second half of 2009, the Polish economy stood out against other countries in terms of GDP growth. Poland’s economic growth was higher than projected and higher than in other European countries.
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• In 2009 construction output increased by 3.7%.
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• Retail sales increase in most product groups.
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• On the Warsaw Stock Exchange, stock prices were very volatile in January 2010.
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• At the end of December 2009 the registered unemployment rate (claimant count rate) amounted to 11.9% versus 11.4% in November.
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• At the end of January the president signed the 2010 budget bill into law. The bill was adopted by the parliament on December 18.
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• In the fourth quarter of 2009 the Polish economy turned out to be more resistant to the global crisis than had been projected and than the economies of Polish neighbours, something which boosts optimism in forecasts for 2010 and the next years.
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WEEKLY MARKET ANALYSIS

Retail sales up again in June
Retail sales growth in nominal terms accelerated in June to 6.4% y-o-y from 4.3% y-o-y in May. The increase was higher than expected. In real terms, retail sales growth accelerated to 4.5% y-o-y from 2.0% y-o-y. June was a consecutive month with retail sales figures stronger than expected, which indicates that consumption is recovering after it slowed significantly at the beginning of the year. Private consumption is driven by an improvement on the labour market coupled with a rise in disposable incomes. In Q2 2010 retail sales grew by around 3% y-o-y in nominal terms and around 1% y-o-y in real terms. On the basis of retail sales and industrial production data, it can be estimated that the GDP growth rate was close to 3%.

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