In Poland, the December surplus was five times lower than in November and compared to the market consensus of €1.1 billion. However, there is a strong seasonal trend in foreign trade, with volumes lower in December due to the holiday season. Nevertheless, the country continues to be an exporting nation. And the rebound in imports is not necessarily negative: Poland recorded current account surpluses in every single month of 2020, making 18.4 billion euros (3.6% of GDP) in the pandemic year compared to a surplus of 2.6 billion euros in 2019 (0.5% of GDP). The trade surplus of goods increased by 1.2 billion euros in 2019 to 11.7 billion euros in 2020. Strong performance in exports of goods indicates that the country has appeared almost immune to pandemic restrictions as it is driven by durable consumer goods. In addition, exports have benefited from previous foreign direct investment in the field of “green” production of electric car batteries, car parts, and vehicles. For example, car battery production 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 thanks to green FDI, a positive sign even if inflationary, despite the fact that the investment rate has hit rock bottom in recent quarters.

According to the Central Bank, the most dynamic growth in imports was recorded in clothing, wireless communication devices, computers, medical diagnostic tests, and car components. Net exports contributed positively to the strong GDP growth performance in 2020, with Central Statistical Institute analysts predicting a current account surplus moderated to 2% of GDP.

In this scenario, however, retail sales fell by 6.0% year-on-year in January compared with a 0.8% decline in December: trade restrictions distorted the seasonality of traditional sales, and clothing growth fell by 30 percentage points compared to December. Sales of furniture, household appliances, and electronics showed a positive dynamic, accelerating by +7.1% compared to +3.5% in December. Seasonally adjusted sales fell 1.4% month-on-month in January due to extensive restrictions on shopping malls: the growing share of online sales does not offset the decline of other channels. Construction output fell by 10% in January and fell below market expectations (-7.3%): the harshest winter in recent years led to a decline in all sectors of construction activity.

February could be worse for the economy. Activity indices based on population mobility and daily indicators for the industry show a sharp decline in Germany. And it should be remembered that border controls can further disrupt supply chains: the blockades 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: in the face of a slight quarterly contraction in GDP in the first quarter of 2021, assuming vaccinations accelerate during the second quarter and restrictions are relaxed, growth in Poland is expected to rebound in the second half of the year. For now, GDP forecasts are +4.5% for 2021.