Atradius publishes economic insights on Russia and Poland

New country reports have been published on Russia and Poland by leading trade credit insurer Atradius.

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.

Atradius’ Russia Country Report 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, a contraction of 6.3% is forecast for 2020 with a 3.3% rebound in 2021.

Following a seven-week enforced lockdown, physical distancing measures have been gradually eased. However, private consumption is still expected to contract by more than 5% this year with investment decreasing by more than 13%. 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.

Analysing 12 key sectors in Russia, Atradius economists have 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. More positively, Atradius has rated the outlook for the financial services, food, metals, paper and steel sector as ‘fair’.

In its Poland Country Report, Atradius reveals an economic contraction of 3.5% is expected in 2020; lower than the Eurozone recession rate of 8% as Poland is less dependent on exports than its counterparts. In 2021, the Polish economy is forecast to rebound by 5.6%. Exports in Poland are forecast to decrease 4.3% in 2020 due to a deterioration in external demand, especially for cars and car parts, with private consumption forecast to shink 4.8% this year due to the pandemic spread, subsequent lockdown measures and rising unemployment. By comparison Eurozone exports are forecast to decrease by 11.1% and private consumption by 9.6%.

Atradius reveals certain industries in Poland are severely impacted by the economic downturn and are likely to experience an increase in insolvencies. The automotive/transport sector 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. Meanwhile, the agriculture, chemicals/pharma, electronics/ICT, financial services, food and paper sectors have a ‘fair’ performance outlook.

Atradius regional manager Tanya Giles commented: “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. 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. Choosing a business partner who can support you do this has never been more important.”