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A business consultancy, based in London, England, John Sacks' JSA Consultancy Services provides expert, in-depth, information advice and guidance as to how to exploit successfully the office furniture and interiors markets in Europe, North America, Australasia and Japan.

Polish industry still going strong

Friday 17 February 2012

While the eurozone stutters into a recession, Poland’s economy continues to do well: industrial production numbers released today show an annual increase of 9 per cent in January.

“Polish industry is still strong,” writes Malgorzata Starczewska-Krzysztoszek, chief economist with Lewiatan, the Polish employers confederation. She notes that the decent numbers came in despite a strong January 2010.
Although encouraging, the number was slightly below market expectations and was in part a result of the zloty’s weakness in the first month of the year, which provided a fillip to exports.

Production for export – including chemicals and machinery – was up strongly, as was construction, which was boosted by the mild winter and is tied to infrastructure projects associated with the fast-approaching European football championships being co-hosted by Poland.

The numbers were also boosted by two extra working days compared to January 2010.

Marcin Mazurek, an analyst with Bre Bank, says: “There is still a lack of hard evidence showing a slowdown in industry, and we have recently seen an improvement in sentiment.”

Poland, like much of the rest of the CEE region, is showing an unexpected resilience in exports despite obvious signs of a slowdown in western Europe – the eurozone’s economy contracted by 0.3 per cent in the last quarter of the year, and Germany, the destination of a quarter of Polish exports, saw a contraction of 0.2 per cent.

Polish companies were helped by the zloty, which lost ground against the euro in December and January before regaining some ground this month, and by more durable factors. Poland has managed to nurture a host of nimble companies that rely on cheaper labour and modern facilities to penetrate eurozone economies.

Polish exports last year grew by 10.5 per cent, to €138m – a record.

The question is whether Poland can continue to defy gravity if Germany’s slowdown continues. Jana Krajcova of Erste Bank writes:

We continue to think that Poland will suffer the consequences of falling external as well as domestic (due to ongoing fiscal consolidation) demand and industry will eventually ease. Moreover, with the stronger zloty, the exporters will be loosing one of the cushions. January PMI showed improving external orders and more optimistic sentiment, which should keep the Polish industry up in the coming months but we believe that this improvement will only prove temporary.

However, Polish businesses remain bullish.

“Most of our clients and our competitors expect a weak 2012, but we think we can take advantage of that and gain market share,” says Roman Przybylski, sales director with Nowy Styl, a furniture maker which saw sales to Germany rise by 12 per cent last year.

(Reprinted from The Financial Times; 17 February 2012

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