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The Trade Numerologist: Amid Turmoil, a Polish Miracle, Made of Exports

22 October 2018 John Miller

Exit polls taken after the recent local elections in Poland suggest a moderate victory for the country's embattled right-wing populist government.

The Law and Justice party, currently in power, took around a third of the vote, a few points lower than its result in 2015, but higher than in 2014. Civic Platform, the main opposition party, won around a quarter of the vote.

Law and Justice has been fighting the European Union (EU) in court over its attempts to reshape the judiciary to its liking, sparking tension with Brussels, and the biggest crisis since Poland joined the EU in 2004.

Beyond the politics, the tension between Warsaw and Brussels has been exacerbated by a simple economic fact: Poland can afford to be bolder in its foreign policy because it's a lot richer than it used to be.

In 1989, per capita income in the Soviet bloc nation was under $2,000. Today, it's over $15,000. Poland is a regional power with a population of 38.5 million and a trillion-dollar economy, the largest in Eastern Europe, and the seventh biggest in the EU.

A big slice of that wealth comes from exports. Polish exports, in large part to fellow EU members, increased 18% during the first seven months of 2018, continuing a pattern of strong growth.

Polish exports, every five years, 2002-2017

  • 2002: $41.2 billion
  • 2007: $140.5 billion
  • 2012: $185.6 billion
  • 2017: $231 billion

When Poland joined the EU in 2004, it was still a sleepy, Soviet-style economy reliant on farming and heavy industry. Since then, it's aggressively embraced market reforms, and taken advantage of billions in EU funding for developing its rural areas.

Poland, also a NATO member, is now a key regional player. It borders export powerhouse Germany and the North Sea, where it has Gdansk, a world-class container port.

Thanks to its geography, it's managed to integrate itself into Germany's expansive manufacturing supply chains. Poland's factories now produce and export large quantities of cars, furniture and machinery of all kinds. During the 2009 financial crisis, Poland was the only EU country to not fall into recession.

Top Polish exports, first seven months, 2018

  • Electric machinery $20.4 billion (+21%)
  • Cars, trucks and parts, $18.2 billion (+14%)
  • Electronics $15.7 billion (+15%)
  • Furniture $8.8 billion (+17%)
  • Plastics $7.7 billion (+24%)
  • Articles of iron and steel $5.1 billion (23%)
  • Gas and oil $4 billion (+24%)
  • Rubber $3.5 billion (+14%)
  • Meat $3.5 billion (+24%)
  • Wood and articles of wood $3.4 billion (+22%)

The presence of Germany, the world's top auto exporter by value, has helped established Poland as a key cog in Europe's auto industry. Besides hosting factories belonging to Fiat, Opel, Volvo and others, the country has hundreds of parts manufacturers feeding the heavyweights across the German border.

Polish car, truck and parts exports, first seven months

  • 2009: $11.5 billion
  • 2010: $12.4 billion
  • 2011: $14.7 billion
  • 2012: $12.7 billion
  • 2013: $13 billion
  • 2014: $14.2 billion
  • 2015: $13 billion
  • 2016: $14.5 billion
  • 2017: $15.9 billion
  • 2018: $18.2 billion

Despite the current tension, Poland is unlikely to follow Britain and try to exit the EU. That's where most of its exports go.

Top destinations for Polish exports, first seven months, 2018

  • Germany $42.7 billion (+22%)
  • Czech Republic $9.7 billion (+18%)
  • UK $9.2 billion (11%)
  • France $8.7 billion (+19%)
  • Italy $7.2 billion (+9%)
  • Netherlands $6.8 billion (+18%)
  • Russia $4.5 billion (+19%)
  • US $4.2 billion (+20%)
  • Sweden $4.2 billion (+18%)
  • Spain $4.1 billion (+17%)

Meanwhile, Poland still relies on China and Russia as a source of foreign imports. This year, it ramped up its orders of oil and gas from Russia, cars and trucks from Germany, and toys, furniture and clothes from China.

Top sources of foreign imports, first seven months, 2018

  • Germany $42.2 billion (+19%)
  • China $11.7 billion (+17$%)
  • Russia $10.8 billion (+36%)
  • Netherlands $8.7 billion (+14%)
  • Italy $8 billion (+14%)
  • France $6.4 billion (+17.7%)
  • Czech Republic $6 billion (+22%)
  • Belgium $5.8 billion (+15%)
  • UK $4 billion (+21%)
  • Spain $3.7 billion (+31%)

The increase in imports also points to Poland's increased prosperity, and subsequent integration in, and dependence on, the global economy.

In a recent editorial published in the Wall Street Journal, prime minister Mateusz Morawiecki boasted that his country was the first "in nearly a decade to graduate from emerging-market status and enter the ranks of the world's developed economies."

Poland, he pointed out, "has joined countries such as the U.S., Germany and South Korea in the FTSE Russell index of advanced economies. For Poland, the first country in East-Central Europe to join the index, the distinction is the fruit of a long effort to build a flourishing market economy on the ruins of the communist system that the Solidarity movement helped topple in 1989."

This month, Mr. Morawiecki, already clashing with the EU, has been embroiled over controversy surrounding remarks he was caught making on tape. As his Western neighbors might tell him, in the 21st century a prosperous economy doesn't guarantee political stability. Poland's parliamentary elections are next year.

Posted 22 October 2018 by John Miller, Guest Blogger


The Trade Numerologist is IHS Markit's unique weekly look at global trade by award-winning journalist John W. Miller, formerly of the Wall Street Journal, using proprietary numbers from IHS Markit's Global Trade Atlas database, the world's most complete and accurate set of trade numbers.

What topic would you like the Trade Numerologist to cover? Email tradenumerologist@gmail.com with comments and questions.

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