Production costs on huge rise

Thursday, 13 October, 2022 Food From Poland 39/2022
Marcin Graczyk, Director of the Department of Partnership and Communication, Polish Investment and Trade Agency (PAIH)
Both the COVID-19 pandemic and the war in Ukraine have significantly affected the processes in the global economy. As a result of pandemic restrictions and the limitation of demand, industrial enterprises were often forced to cease production. The increase in energy raw material prices and component supply shortages have been particularly painful to the automotive sector. Therefore, some European economies are still unable to catch their breath after the pandemic. Poland stands among the countries that have managed to recover from the “coronacrisis”. This February, the domestic industrial production has increased by almost 25% y/y. At the same time, the production in the Eurozone has dropped, while in the entire EU, it has only recorded a slight increase.
Additionally, Europe has found itself in a difficult situation after the Russian aggression on Ukraine, since most countries of the Old Continent had been dependent on imports of goods from the East until then. Although Poland has not been affected to such a large extent, our economy is feeling the effects of the war just as other economies do. The most severe effect that Polish entrepreneurs mention frequently is the increase in business costs. Disruptions in the functioning of supply chains come second, and employment problems occupy the third position. However, Polish companies are flexible and quickly adapt to new conditions. This is evident from the results of Polish exports. In the first half of this year, the sales of Polish goods, expressed in euros, were 19.1% higher than the year before. Significant increases in export value were recorded by such industries as door and window joinery or the food sector. It is predicted that the collapse of trade with Russia and Ukraine will limit the growth of the trade volume, yet overall, Polish exports may grow by more than a dozen per cent y/y.

A phenomenon that alters the face of international trade is nearshoring, involving the shortening of supply chains through regionalization of processes and relocation thereof closer to main offices of companies. How can Polish businesses benefit from this? From Poland, one can deliver goods to most European cities within 24 hours, and to the entire continent – within 48 hours. This is a great opportunity for our entrepreneurs, including small and medium ones.

Marcin Graczyk
Director of the Department of Partnership and Communication
Polish Investment and Trade Agency (PAIH)

tagi: food market , sales , trade , consumer , FMCG , wholesale , retail , food products , news , new products , food industry , retail chains , grocery stores , Poland ,