beyondbrics

Poland’s zloty is doing even worse than the euro on international markets, as financial investors continue to flee what they see as potential risk.

But there is an upside for Poland. A cheaper currency should continue to boost the country’s exports, and will continue to lure foreign direct investment.

Marcin Piatkowski, senior economist at the World Bank’s Warsaw office, even says that the new EU member states are going to make life more difficult for the troubled PIIGS of the eurozone, as they have to compete against aggressive countries trying to catch up to western Europe, who also have the advantage of still having their own currencies.

One example of what such competition could mean came from Dell’s decision last year to close a production line in Ireland and shift to Poland. This year Opel is closing a factory in Antwerp, while expanding production at its Gliwice plant in southern Poland.

Poland’s exports were up by an annual 24 per cent in March – a figure that should show continued improvement this year as the sagging euro boosts German exports. That is because many German companies source at least some of their production in central Europe. In the Czech Republic, the March trade surplus widened by an annual 31 per cent.

The revival in exports, particularly from Poland, is attracting the attention of investors. March was the third month in a row in which FDI showed a steady increase – and for the first quarter FDI came to $3.5bn.

Poland last year had €8.4bn in foreign direct investments, down from €10nbn in 2008 – a much smaller drop than that experienced by most of Poland’s emerging market neighbours.

“We are winners of the crisis,” says Slawomir Majman, the head of PAIiIZ, the Polish investment agency, speaking by telephone from China where he was taking part in the Shanghai Expo 2010. “Poland is a supplier of a truly rare product in the current environment – economic stability – investors have realised that Poland is stable.”

Poland’s economy may be stable, but how long before its commitment to join the euro starts to look wobbly?