Polish food producers are trading at their lowest level five years relative to earnings after Russia banned imports from the European Union, freezing $1.7 billion of the country’s exports.
The WIG-Food Index grouping 24 Warsaw-listed food-industry companies, dropped 0.9 percent to lowest since July 2009 at 11:15 a.m. in Warsaw. The gauge has lost 28 percent this year, compared with a 3.4 percent slide in the all-share WIG Index.
Russia slapped import bans on an array of food goods from the U.S., EU, Norway, Canada and Australia for one year, including all cheese, fish, beef, pork, vegetables, fruit and dairy products yesterday in retaliation for western sanctions. Poland’s food exports to Russia increased 19 percent last year, according to the Warsaw-based statistics office.
“Assuming a 15 percent to 20 percent drop in exports to Russia in the whole 2014, Polish economic growth may slow by 0.3 percent to 0.4 percent this year,” Warsaw-based economists at ING Groep NV, led by Rafal Benecki, said in a note today. “Additional negative impact will also come from the collapse in trade with Ukraine.”
The import curbs target countries that sanctioned or supported punitive steps against Russia amid a standoff over Ukraine, where the West accuses President Vladimir Putin of backing insurgents in the country’s east after he annexed the Crimea peninsula in March.
Poland, the EU’s fifth-biggest food producer, sells mostly apples, pears, cheese and pork to Russia, Agriculture Minister Marek Sawicki told Gazeta Wyborcza newspaper today.
PKM Duda SA, a producer of meats, cold cuts and sausages, fell 4.3 percent to 6.08 zloty, heading for the lowest close since 15 months. Colian SA, a confectionery producer, dropped 3.7 percent to 2.89 zloty.
Poland’s economy will expand 3.6 percent this year and next, according to the central bank’s projection from July.