Trade between the UK and Poland faltered in the first half of 2009, after 16 years of uninterrupted growth. The global economic crisis has hit bilateral trade, which totalled £3.2 billion in January-June 2009 (down from £3.5 billion in the same period of 2008, representing a fall of 8.4%). Polish exports to the UK fell by 10% from £2.1 billion to £1.9 billion; UK exports to Poland fell by 7.2% from £1.4 billion to £1.3 billion.
The story is not as gloomy as it seems at first sight; after five months (January to May) where bilateral trade was below 2008 levels, June 2009 showed a return to growth (indeed the best June ever in terms of export performance between the two countries). Polish exports to the UK continued to grow in July, which seems to confirm a trend, though UK exports to Poland in that month were down on July 2008.
The most significant falls were in the automotive sector, which in recent years contributed the largest share of trade in both directions. Sales of UK-manufactured passenger cars in Poland fell by 63% (from £126m to £47m), while sales of Polish-manufactured passenger cars in the UK fell by 52% (from £230m to £111m). For details, see Table 1, below.
Strong agrifood and chemicals sector performance
Despite the overall weakness in trade, there were two strong bright spots. One was the chemicals sector (and in particular pharmaceuticals), the other is agrifood. British exports of chemicals rose by 7.9% in the first half of 2009 (from £334m to £360m), while trade the other way rose by 19% (from £139m to £166m). Bilateral trade in food also grew rapidly in both directions despite the general downturn. British exports of food products to Poland rose by 8.2% in the first half of 2009 (from £52m to £56m), while Polish food exports to the UK grew by 9.2% (from £236m to £258m).
Polish beer and Scotch whisky sales both hit by economic slowdown
Trade in beverages fell dramatically (by 19.9% and 35% respectively). Scotch whisky, traditionally the driver of UK beverages exports around the world, has had a tough six months in Poland (from £7.9m in the first half of 2008 to £6.8m in the first half of this year), but the real loser was Polish beer export to the UK (from £8.2m in the first half of last year to £2.2m in the first half of 2009). This suggests that Polish migration flows are reversing, and that Poles who have stayed on in the UK are adjusting their taste to local beer! Poland’s economic fundamentals remain strong and, as the only EU Member State not to experience recession, the country continues to offer attra ctive growth opportunities for UK companies. Relatively unexploited by British middle-sized exporters, Poland has joined the UK’s Top 20 export market club and vies with China, Russia, India and Japan for position. Meanwhile the UK remains in Poland’s Top 5. What is the outlook for rest of 2009? Martin Oxley, BPCC, CEO takes an upbeat stance: “Undoubtedly 2009 is a challenging year but we can see signs that trade can recover. The pound and the zloty have both depreciated vis-à-vis the euro, so both countries’ exports have become more competitive in these two markets.” The BPCC is taking a roadshow around the UK in October, visiting Southampton, London, Warrington, Glasgow and Edinburgh, to show British exporters what the opportunities in Poland are, and what practical steps are needed to succeed on the Polish market.