Atradius reports on Poland and Russia
Two new economic insight reports on Poland and Russia have been published by trade credit insurer Atradius (www.atradius.co.uk) to help businesses navigate the risks of international trade when dealing with these countries in Eastern Europe.
“In today’s environment, the challenges and risks for business are constantly changing and it is therefore vital to stay one step ahead when it comes to your risk management strategy,” says Tanya Giles, Regional Manager at Atradius.
“Information is key and most importantly the accuracy and relevance of that information; in the current challenging environment, things are changing quickly and access to up to date data is crucial. Businesses must ensure they are equipped to comprehensively monitor the markets they are trading in and effectively analyse the risks.”
Atradius’ Russia Country Report (https://atradius.co.uk/reports/country-report-eastern-europe-russia-2020.html) reveals that the Russian economy is under strain due to low oil prices and bleak global growth prospects after growing just 1.3% in 2019. For 2020, Atradius is forecasting a contraction of 6.3% with a 3.3% rebound in 2021.
Russian exports are expected to contract by more than 11% due to oil production cuts with imports down 23% as domestic demand decreases, and the Government retains its import substitution policy.
Looking forward, prospects for Russia remain subdued with structural weaknesses including a shrinking workforce, dependency on natural-resource sectors, institutional weaknesses, poor productivity growth and a difficult business environment continuing to weigh on growth.
In analysing 12 key sectors in Russia, Atradius economists rated the outlook for the machines/engineering and textiles industries as ‘bleak’, while a ‘poor’ outlook has been attached to the agriculture, automotive/transport, chemicals/pharma, construction, consumer durables, electronics/ICT, oil/gas and services sector. However, Atradius has rated the outlook for the financial services, food, metals, paper and steel sector as ‘fair’.
Atradius forecasts an economic contraction of 3.5% for 2020; lower than the Eurozone recession rate of 8% for the country in its Poland Country Report (https://atradius.co.uk/reports/country-report-eastern-europe-poland-2020.html), as Poland is less dependent on exports than its counterparts. Exports in Poland are forecast to decrease 4.3% due to a deterioration in external demand, especially for cars and car parts, with private consumption forecast to shrink 4.8% this year due to the pandemic spread, subsequent lockdown measures and rising unemployment.
Industries in Poland continues to be severely impacted by the economic downturn and Atradius is forecasting a rise in insolvencies particularly for the automotive/transport sector that has a ‘bleak’ performance outlook after suffering from deteriorating vehicle sales.
In the construction sector the performance outlook is ‘poor’ with the industry impacted by the postponement of projects and reduced order volumes, on top of already very tight operating margins. The outlook is also ‘poor’ for the machines, metals and steel industries as a consequence of deteriorating demand, alongside the consumer durables and textile industries which have been negatively affected by lockdowns, lower consumer sentiment and rising unemployment. However, agriculture, chemicals/pharma, electronics/ICT, financial services, food and paper sectors have a ‘fair’ performance outlook.
“As a key partner to business, Atradius regularly produces country, economic and sector reports as an information tool, designed to support firms develop robust credit management strategies to navigate the risks of international trade,” comments Giles. “Choosing a business partner who can support you do this has never been more important.”