In Poland the December surplus was five times smaller than in November. However, there was a strong seasonal pattern in foreign trade, with lower volumes in December due to the holiday season. Nonetheless, the country continues to be an exporting nation. And the rebound in imports isn't necessarily bad: Poland has recorded current account surpluses in every single month of 2020, making €18,4 billion (3,6% of GDP) in the pandemic year compared to a €2,6 billion surplus in 2019 (0,5% of GDP). The merchandise trade surplus increased by €1,2 billion in 2019, to €11,7 billion in 2020. The solid performance in goods exports means that the country has appeared nearly immune to pandemic restrictions as it is driven by durable consumer goods. Furthermore, exports benefited from precedents foreign direct investments in the field of "green" production of electric car batteries, car parts and vehicles. For example, production of automotive batteries contributed about 2,5% to December's impressive 11% growth in industrial production, also stimulated by calendar effects. The rebound in imports could suggest a recovery in domestic demand in Poland, a positive albeit inflated sign, despite the investment ratio bottoming out in recent quarters.
According to Central Bank, the most dynamic growth of cheap imports has been registered in the compartments apparel, wireless communication devices, computers, medical diagnostic tests, and auto parts. Net exports contributed positively to solid GDP growth performance in 2020, with analysts from theCentral Institute of Statistics which forecast a moderate current account surplus at 2% of GDP.
In this scenario, in January retail sales however, they were down 6,0% year-on-year from a 0,8% decline in December as trade restrictions distorted the seasonality of traditional sales and apparel growth plunged 30 percentage points from December. Sales of furniture, household appliances and electronics showed a positive trend, accelerating by +7,1% compared to +3,5% in December. Seasonally adjusted sales fell 1,4% month-on-month in January, due to expanded restrictions on shopping malls: the growing share of online sales does not compensate for the decline in other channels. Building production in January decreased by 10% and was below market expectations (-7,3%): the harshest winter in recent years brought about a decline in all sectors of building activity.
February could be worse for the economy. The activity indices based on population mobility and the daily indicators for industry show a sharp decline in Germany. And it should be remembered that border controls can further disrupt supply chains: lockdowns in Europe are prolonged, with slow vaccination progress and the risk of a third pandemic wave. This suggests that we remain cautious about growth estimates: against a slight contraction in quarterly GDP in the first quarter of 2021, assuming vaccinations accelerate during the second quarter and restrictions are eased, growth in Poland should rebound in the second half of the year. For now, GDP forecasts stand at +4,5% for 2021.
