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Polish unemployment remains steady at 6.1%

The Polish Central Statistical Office (GUS) reported that August’s unemployment rate remained unchanged at 6.1%. The seasonally adjusted rate however was closer to 6.3%, which is marginally down on July’s seasonally adjusted rate of 6.4%. Based on the non adjusted figures, the number of people registered unemployed in August amounted to just under 1.03 million.

Poland had recorded its lowest ever seasonally adjusted unemployment rate of 5.1% in February 2020 – more than half the rate it recorded in February 2015 (11.1%) – however, the impact of Covid-19 has resulted in an almost 25% increase in the unemployment rate (5.1% vs 6.3%).

Based on non-seasonally adjusted unemployment rates, the cities of Katowice (1.5%), Warsaw (1.8%), Poznan (1.8%), Wroclaw (2.4%) and Krakow (2.7%) all recorded unemployment rates well below the national figure of 6.1%.  

Key sectors such as Manufacturing, Agriculture, Business Services, Technology Services show signs of resilience in spite of the macro-economic impacts of Covid-19, stabilising the economy, reducing the amount of government stimulus, and boosting domestic consumption – a key indicator of Poland’s progress toward EU financial convergence.

Sources from the Central Statistics Office (GUS):

Poland’s €5.6b EUR Trade Surplus Jan – Jul 2020.

The Polish Central Statistical Office (GUS) last week advised that during the period of January to July 2020, Poland recorded a foreign trade surplus of €5.6b EUR. For the same period in 2019, Poland recorded a trade deficit of minus €0.2b EUR.

Whilst a surplus is always welcome news, it does come a result of significantly reduced trade – with exports of €129.6b being down 6% for the same period in 2019, and imports down 10% to €124.0b.

There is variation in the calculation of Poland’s trade balance which, depending on the reporting currency, can show different % values for import and export movements.

In the local Polish currency, the % decline in import / export values is less pronounced than the Euro based calculation with exports showing a decrease of 3.9% and imports decreasing by 8.1%.

When expressed in USD, the reduction in overall trade value shows a decrease in exports of 8.4% and a decrease in imports of 12.3%.

Source: GUS (Statistics Office) ‘Foreign trade turnover of goods in total and by countries in January-July 2020.’

Innovation, Agrotech, & Agriculture 4.0

The Polish Ministry of Funds and Regional Policy (MFiPR) announced a funding award of ~€2.7m EUR to a Polish consortium that will undertake research and development of an intelligent, ‘precision farming’, field robot for maize cultivation.

Comprised of leading agricultural equipment manufacturer ‘UNIA’, the Industrial Institute of Agricultural Engineering, and the Institute of Aviation, the consortium will undertake research involving onboard sensor systems, a data processing system and a precise agrotechnical process control system.

The funding is part of the EU’s Smart Growth program managed through a subsidiary scheme called the Intelligent Development Program which is aimed at boosting innovation in Poland. Specialist consulting firm Bosetti Global Consulting, summarises the purpose of the intelligent development program as being to:

“…support implementation of the entire innovation process, from conception of an idea, through the R&D stage, and on to commercialization of R&D results i.e. launching a product or service.”

In their excellent report on ‘Agriculture 4.0’, Oliver Wyman states that:

“Agriculture 4.0 will no longer depend on applying water, fertilizers, and pesticides uniformly across entire fields. Instead, farmers will use the minimum quantities required and target very specific areas.”

In their announcement, MFiPR stated that the precise nature of the field robot will:

  • Significantly reduce the consumption of fertilizers and plant protection products.
  • Sow, heal, and monitor the condition of the crop.
  • Conduct selective spraying.

The Secretary of State at MFiPR, Anna Gembicka provided some additional commentary about the project and how it fits with the EU strategy of more intelligent farming:  

“Precision farming is the industry of the future, especially when it comes to Poland. Innovations in agriculture, including those related to the automation of machines and processes, are a priority area supported by European Funds, which thus accelerate qualitative change in the countryside.”

Days later the MFiPR announced that a further ~€22.4m EUR will be made available as part of an IDP backed ‘Agrotech’ fund. The funds can be used for industrial research, experimental development and pre-implementation work.

As part of the additional funding announcement, Secretary of State Anna Gembicka recognised the importance of the program to both Poland and Europe by stating:

“European Funds support innovation in all sectors of the economy, including the agri-food sector. Thanks to this, Poland can strengthen its high position in the production of healthy and valued food in the world and export high technologies for its production. These technologies can contribute to the modernization of agriculture in many countries”

As we’ve previously written, the food industry in Poland is a significant contributor to the Polish economy (valued at over €57b EUR) and a highly important part of long term food security within the EU.

AI drives small format convenience store growth.

The WNP.pl portal reported that Poland’s largest chain of small format convenience stores called ‘Żabka’ – which means ‘Frog’ in English – is using machine learning and AI to determine what inventory to stock at each of its locations (“hyper-personalization”).

WNP.pl quoted Tomasz Blicharski, VP of Finance & Development at Żabka Polska, as saying that machine learning plays a crucial role in determining which locations to open new outlets of the convenience store. The Żabka network already comprises 6,443 stores with 4,800 franchisees however it continues to add outlets to its portfolio.

We were not provided with many details on the exact AI & machine learning methodology but it’s clear there is a digital transformation underway at Żabka as they recently launched a home delivery service using Uber Eats and are pushing a consumer focused loyalty and discounts app.

Original article in Polish – https://www.wnp.pl/tech/zabka-dzieki-sztucznej-inteligencji-otwiera-wiecej-sklepow,416368.html

‘Buy Polish’ campaign nets sales €186m EUR in one week.

According to ISB News, one of Poland’s largest supermarket stores, Biedronka sold 830m PLN (€186m EUR) of Polish products during its first week of a campaign loosely translated to ‘Buy Polish’.

The largest single day of trading registered 150m PLN (€33.66m) of sales for ‘Polish’ products either belonging to Polish brands, or items produced, processed, or packaged in Poland. There is a certain irony Biedronka’s campaign given the chain of no-frills supermarket is owned by the Portuguese group Jeronimo Martins (JM).

At the end of June 2020, Biedronka operated over 3,030 outlets across Poland. In its 2019 annual report JM showed annual revenues for Biedronka reaching €12.6b with EBITDA of €0.92b.

For comparison, Coles supermarkets in Australia operated 821 outlets, achieved €19.06b revenues,  and generated an EBIT of €0.73b in 2019.

Original article (in Polish): https://www.money.pl/gielda/biedronka-sprzedaz-w-akcji-wspierania-polskich-produktow-830-mln-zl-w-tydzien-6550104406447745a.html

Patriotic Oil, Energy & Hotdogs.

Polish oil refiner and fuel retailer, PKN Orlen, reported that 85% of stocked items at its 1,800 service stations are produced in Poland and sourced from 170+ Polish suppliers. With a Polish eagle as a logo in Polish red and white colours, patriotic sourcing seems natural for a conglomerate that is 27.59% owned by the Polish Treasury.

With revenues of $29b USD, Orlen’s patriotic pursuits extend to a proposed merger with fellow Polish oil refiner, LOTOS Group ($7.9b USD revenues) which itself is 53% owned by the Polish Treasury. This comes on the back of Orlen acquiring a majority stake in electricity supplier Energa ($3.2b USD) and lining up a majority stake in state owned gas supplier PGNiG ($11.4b USD).

The M&A strategy of Oreln is backed by the Polish government as it aims to strengthen regional energy security through the expansion of LNG terminal storage capacity in the port cities of Gdynia and Gdansk, the building a gas pipeline to Norway, establishment ot offshore wind farms generating 3.8gw by 2030 (rising to 28GW by 2050), and a plan to construct several nuclear power plant blocks that will add 6 – 9 gigawatts to the Polish grid by 2043.

Volkswagen compact camper to be built in Poznan

Volkswagen announced they will build the new VW Caddy ‘California’ compact campervan exclusively in the western Polish city of Poznan. Production is scheduled to commence in November / December 2020.

VW Poznan produced 266,127 vehicles in 2019 and employs over 11,000 people.

You can check out the full gallery of images at https://www.autoexpress.co.uk/vans/352898/new-volkswagen-caddy-california-officially-unveiled

€234m EUR of EU Funds For Krakow To Zakopane Rail Upgrade.

EU approves €234m EUR for rail modernisation project in southern Poland.

On Friday 28th Poland was awarded €234m EUR of EU Cohesion Funds to upgrade 117km of PKP S.A. railway track between the historical city of Krakow and the mountain resort town of Zakopane.

As part of the co-financing agreement, the Polish treasury will commit €100m to the project which is scheduled for completion by 2023.

Source – https://www.pb.pl/ke-zatwierdzila-234-mln-eur-na-linie-kolejowa-do-zakopanego-1000724

13,000+ Electric Cars & Rising.

On Wednesday 26th August, the Polish Association of Automotive Industry (PZPM) and the Polish Alternative Fuels Association (PSPA) released data showing Poland has 13,057 electric passenger cars registered on the road.

Electric & Hybrid vehicles as July 2020 according to pspa.com.pl | pzpm.org.pl

The split between fully electric and plug-in hybrid cars is surprisingly close:

• 7,231 are fully electric (BEV) – 55%
• 5,826 are plug-in hybrid (PHEV) – 45%

The figures released show that registrations of BEV and PHEV cars are up 78% on the same period between January and July 2019. The report also included an update on other electric vehicles registered in Poland, with the notable 172% year on year increase in electric buses as 106 out of 335 registered buses were added during the first 7 months of 2020.

Analysis also showed that Hybrid car registrations climbed to a total of 153,951, with over 30,000 registrations between January and July 2020, up 28% on the same period in 2019. The report showed there were 1,224 public charging stations providing 2,319 individual charging points – of which 33% were fast DC charging and 67% slower AC charging.

The Polish government recently announced a subsidy program for electric vehicles that drew some criticism for lacking a compelling incentive to consumers, however the move by the government in Warsaw is acknowledged as a step in the right direction.

A summary in Polish is available on the orpa.pl website and was the primary source of this article.

Sources: https://orpa.pl/ , https://pspa.com.pl/ , https://www.pzpm.org.pl/

Covid triggers a €43.4b budget adjustment.

On Thursday 27th August, the Polish Ministry of Finance presented a draft budget for 2021 that resulted in a predicted deficit of €18.6b EUR, with Polish government debt climbing to 64.7% of GDP in 2021.

The draft budget called for increased spending on:

• Defence – rising from 2.1% to 2.2% of GDP in 2021 (rising to 2.5% by 2030)

• Health care – up from ~5% to 5.3% of GDP (rising to of 6% by 2024)

• Pension indexation – increasing by 3.84%

• A specific child benefit payment program (“500+”) – amounting to €9.3b

Thursday’s announcement follows on from news last week that the once balanced budget of 2020 would be significantly adjusted to reflect a decline in GDP of -4.6%, resulting in a €24.8b deficit.

The combined €43.4b deficit for 2020 and 2021 is a significant hit to Polish finances however with GDP growth in 2021 predicted to be above 4% and inflation rising somewhere between 1.8% and 2.3%, market confidence remains high.

For reference Poland’s GDP in 2019 reached around €520b – depending on the method of currency conversion.