Poland’s expanding exports of manufactured goods and its continued investment in its manufacturing processes affirms its position in global supply chains
Date: 17 June 2021
Poland’s expanding exports of manufactured goods and its continued investment in its manufacturing processes affirms its position in global supply chains. Consistent with the global trend, Poland’s economy saw negative growth in 2020, although it picked up by the third quarter as industrial activity gradually resumed. Poland’s GDP growth contracted by 2.8% in 2020, a much lower drop compared to the 6.4% aggregate decline faced by the European Union (EU).
Trends: Poland became a member of the EU in May 2004 under the Accession Treaty, and from 2005 onwards it has been among the top 30 global exporters, ranking 23rd in the world in 2019. Most of Poland’s export partners are other EU members, Germany being the top recipient of its exports. Exports in machinery & electronics and agriculture & forestry goods are its largest export categories and made up 25% and 19% of total exports respectively in 2020.
- Poland’s annual exports in 2020 increased to USD 254bn following USD 252bn in 2019, achieving year-on-year export growth of around 1% despite disruptions wrought by the pandemic
- Total exports grew at a CAGR of 11% from 2001 to 2020, with exports of chemicals & plastics seeing the highest growth at nearly 14% during this period
- Although rich in natural resources, Poland largely exports machinery & electronic goods. In 2020, machinery & electronics comprised 25% of total exports, with this category growing at a CAGR of 12% from 2001 to 2020
- Around 29% of its total exports in 2020 went to Germany, mostly composed of vehicles and vehicle parts
- Since 2015, Poland has largely enjoyed a trade surplus. In 2019, it achieved a trade surplus of USD 5.2bn by reducing its imports by around 8%, following a trade deficit of USD 5.9bn in 2018
- Consumer and capital goods make up most of its exports, with the exports of vehicles and vehicle parts accounting for more than 10% of all exported goods. In addition, Poland is one of the leading suppliers of electric vehicle batteries globally
- Amid the pandemic in 2020, Poland’s trade was characterised by an improved trade balance due to a drop in fuel prices, a growth in the export of computers and processors and a decline in the imports of industrial means of transport
Upshot: Before the pandemic, Poland’s economic growth was strong and uninterrupted owing to effective macroeconomic policies and social programmes laid out by the government, which also greatly curbed the negative impact of the pandemic. In addition, strong domestic demand as well its proximity to Western Europe, Russia and the Middle East further aids its economic growth as well as its position as an important trade partner.
- Poland’s trade surged after it joined the EU, prior to which it managed its foreign trade relations through the Central European Free Trade Agreement (CEFTA)
- Poland’s manufacturing prowess in automobiles, textiles and furniture has contributed significantly to its growth
- It is also an important food supplier in Europe, owing to its large areas of cultivated land as well as investments in modern agricultural infrastructure to produce dairy, frozen food, meat and beverages
- With rising labour and operating costs in Asia as well as disruptions caused by the pandemic, European procurement managers are looking for alternative destinations closer to home, with Poland being a strong contender due to its labour costs being lower than most European countries and its diverse, increasingly competitive manufacturing capabilities
Imperatives: Since Poland resumed economic activity earlier than most countries, its economy is predicted to grow at above 3% in 2021. However, forecasts of its economic growth for 2021 are not guaranteed despite vaccine rollouts, as further waves of Covid-19 affect the EU, and lockdowns are imposed once more. Given that Poland depends heavily on its European neighbours for its exports, the speed of its rebound in the short term cannot be predicted with certainty. But it is clear that Poland’s rise in global export rankings will continue.
- Take advantage of Poland’s strong economic growth, manufacturing strength as well as its ability to recover more quickly, by seriously considering it as a reliable, competitive supply base
- Monitor Poland’s potential to be a resilient supplier amid volatility among its European partners and its ability to expand its reach to newer and faster-growing markets in Asia, Africa and Latin America; Leverage Poland’s centrality in Europe and its proximity to Asia, the Middle East and Africa
- Understand the categories of goods in which Poland demonstrates manufacturing strength and export potential; the category options are expanding and more opportunities are developing to integrate Poland supply in supply chains across industries
- Develop a deeper understanding, capacity and capability in procurement teams to drive Poland procurement and supply