In spite of nearly two decades of strong economic growth, Poland's per capita GDP remains quite low, even compared to other central European economies. However, a credible and independent central bank continues to bolster economic stability and investor confidence. Polish manufacturing is moving up the value chain as it integrates into German supply chains. Although Poland's external position remains relatively strong, a large stock of foreign-owned government paper and ongoing private sector deleveraging represent significant risks.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 24 of Poland’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you ahead of the game, so you can do business with confidence in Poland.

Country Risk

Poland Country Risk

BMI View:

Core Views

  • Poland's robust real GDP growth will continue throughout 2016, driven mainly by household consumption, but also by government spending too.

  • The sharp drop in oil prices has led to a positive adjustment in Poland's external accounts, although growing domestic demand will lead the current account deficit to widen in 2016.

  • The new Law and Justice government will result in a slight widening in the fiscal deficit and looser monetary policy.

Major Forecast Changes

  • As a result of downward adjustments to our Brent crude forecast for 2016, we have lowered our forecast for Poland's current account deficit to 1.0% of GDP, from 1.5% previously. Declining oil prices may have an automatic stabilising effect, by increasing...

Poland Operational Risk Coverage (9)

Poland Operational Risk

BMI View:

BMI View: Overall Poland offers a very attractive investment destination. There is a low rate of corruption and the rule of law is widely observed, securing property rights and helping to ensure a fair outcome in the event of any contract disputes. There are few restrictions on foreign investment and both imports and exports are set to expand over the coming years. Investors also stand to benefit from the well developed domestic financial market and access to a broad range of financial services. That being said, Poland lags behind many of its regional peers in terms of its cumbersome bureaucracy which increases costs and causes lengthy delays when opening a business or registering property. As such, Poland has an overall score of 66.3 out of 100 on the BMI Trade and Investment Risk Index, placing it...

Poland Crime & Security

BMI View:

BMI View: Compared regionally, investors face minimal risks of violent activity. Peaceful relations with neighbouring states and membership of international organisations mitigate the risks posed by interstate conflict. The terror threat is also low, as there are no international groups known to be operating in the country. One of the biggest risks posed to foreign businesses is from cyber crime, with both government and private installations victims of attacks in recent years. Taking these factors into consideration, we award Poland a score of 76.1 out of 100 in BMI's Crime and Security Index, which places the country second out of 31...

Poland Labour Market

BMI View:

BMI View: Poland's large working age population has benefited from significant improvements to the education system over the last two decades. The country therefore boasts a labour market that offers great depth and breadth of options for recruitment. However, risks to investors remain pertinent. The availability of highly skilled workers is being restricted due to large-scale emigration of graduates to countries with better employment opportunities. This brain drain is contributing to a shrinking working age population, which is also being affected by low fertility rates. In addition, high employment costs, relatively stringent labour regulations and the continuing presence of trade unions will deter businesses from locating in Poland, particularly those in labour-intensive industries. Nevertheless, Poland's labour market risks are lower than in most of its regional peers, and the country is therefore...

Poland Logistics

BMI View:

BMI View: Investors in Poland stand to benefit from the country's extensive transport network which offers a multitude of connections to its key regional trading partners with few bureaucratic hurdles to hamper cross-border trade. Poland also has a well developed utilities network, including an expanding telecommunications sector. The key risks facing investors stem from the relatively high fuel and electricity costs, driven by Poland's reliance on fuel imports, and the long term potential for water shortages. The poor quality of the road and rail network are also cause for concern due to the potential for supply chains disruptions caused by congestion and frequent accidents. Overall, however, Poland remains a regional outperformer on the BMI Logistics Risk Index, with a score of 65.3 out of...

Poland Trade & Investment

BMI View:

BMI View: Poland is one of the most attractive locations for FDI in the Emerging Europe region. The government has made great strides towards improving the operating climate during the democratic transition and since accession to the EU, by lowering trade barriers, removing restrictions on foreign direct investment (FDI), and establishing a stable legal environment. Additionally, the country offers a large, open economy, with abundant opportunities for investment, a generous incentive programme, and good access to credit. The main risks faced by investors stem from a cumbersome bureaucracy, which is still in the process of being reformed, and lingering concerns over corruption. These issues do not detract from Poland's otherwise favourable business climate, however, and consequently the country is placed eighth regionally in the BMI ...

Poland Industry Coverage (31)

Agribusiness

Poland Agribusiness

BMI View:

BMI View: Milk prices remained low into H215, but production in Poland has increased regardless as dairy farmers take advantage of the end of the quota scheme. The Polish government is lobbying for EU support on behalf of the dairy industry; however, in the long run it will take the exploitation of overseas markets to secure the future well-being of the sub-sector. We are less optimistic about the sugar segment, which will struggle to increase yields sufficiently to thrive in the post-quota environment. Grain yields will fall sharply on the back of this s...

Autos

Poland Autos

BMI View:

BMI View: Consumers will remain in a sweet spot of rising employment, low inflation, rising real wages and low interest rates, which will encourage household spending on cars and motorcycles.

Passenger Car And Light Commercial Vehicle Sales
(2013-2019)
f = BMI forecast. Source: National sources, BMI
Key Views
* Buoyant capital...

Commercial Banking

Poland Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

Poland Consumer Electronics

BMI View:

BMI View: The consumer electronics market was hit by zloty depreciation in 2015, but the medium-term outlook is much brighter. We expect a further squeeze in 2016, but to a much lesser extent than in 2015, and 2017-2019 we believe that device spending growth will once again be determined by rising incomes and an expanding middle class in Poland. This will yield opportunities for vendors operating in all three device segments over the medium term, through a deepening of the market and potential for an easing of price sensitivity, though vendor competition could limit the extent to which vendors can exploit wider margins as consumers switch to higher value devices. BMI forecasts device spending will increase at a CAGR of 4.1% 2016-2019 to a value of USD9.69bn in 2019.

...

Defence & Security

Poland Defence & Security

BMI View:

We expect Poland to spend up to USD8.1bn on defence in 2015. This is a good increase on the USD7.8bn the country spent on defence in 2014 and reflects a trend we anticipate increasing defence expenditure up to 2019, by which time we expect the defence budget to have reached USD9.6bn.

Poland's defence expenditure is undoubtedly propelled by concerns regarding Russian strategic ambitions, in particular, the resurgence of Russia and its involvement in the Ukrainian civil war, with the country performing a corresponding modernisation and overhaul of its military. Tensions with Russia appear unlikely to dissipate in the near future, and for this reason, we expect high levels of military spending to continue for the rest of the decade.

We have given Poland an overall Security Risk Index score of 89 for Q115. On average, the country has scored an overall Security Risk Index score of 88 for the period February 2009 up to and...

Food & Drink

Poland Food & Drink

BMI View:

BMI View: We forecast positive growth in Poland's food and drink industry, with food consumption growth remaining strong over our five year forecast to 2019. Investment from multinationals in the industry will be fuelled by positive growth in the country's macroeconomic conditions. Russia's ban on Polish agricultural products will encourage new trade partnerships, which will boost the sales lost from the Russian market. We expect premiumisation in alcoholic drinks to strengthen as consumer spending increases, with beer sales falling as a result of increased demand in wine and spirits. Furthermore,...

Freight Transport

Poland Freight Transport

BMI View:

BMI View: Our forecasts for growth in all freight modes in 2016 go in line with 2015 estimates reflecting economic recovery in Poland and major European trading partners. Air freight cargo will see the fastest growth although in terms of tonnage carried, while air freight remains negligible as more than 84% of freight transported on road. Important investment in both road and rail network upgrades will mean increased capacities to accommodate improved domestic demand and imports and growing exports due to better performing economies in the eurozone. Over the medium term this trend will be sustained with total trade growth in Poland projected to average 5.0% in the 2017-2019 period.

Poland has achieved positive GDP...

Information Technology

Poland Information Technology

BMI View:

BMI View: We restated historical data for Poland's IT market in the Q216 update on but there was no material change to our assessment of market trends. There was a slowdown in 2015, and sharp contraction in US dollar terms, when the economic environment was challenging and exacerbated product trends in the hardware segment. We expect IT spending growth will improve over the medium term as economic conditions ease, with the hardware segment expected to benefit from income growth, particularly in global currency terms as the zloty appreciates, which will also translate into healthier profits for international vendors. Meanwhile, the software and services segments will be more stable, and driven by product demand in areas such as data analytics, cloud computing and Internet of Things solutions. We forecast total IT spending will increase at a CAGR of 6.3% over 2016-2020...

Infrastructure

Poland Infrastructure

BMI View:

BMI View : Poland's overall construction market is well developed and the country is home to a number of large domestic construction firms which have expertise in a range of sectors. Transport is the largest subsector and expected to record the strongest overall growth over the next few years as a number of road and rail projects benefit from an influx of EU funding. We are also seeing an uptick in residential construction, supported by improving household incomes and access to financing. The energy sector is the weak link, with private investment undermined by an increasingly uncertain regulatory environment as the government backs away from renewable energy targets.

Latest Updates and Structural Trends

  • A number of...

Insurance

Poland Insurance

BMI View:

BMI View: Poland is home to a relatively well developed insurance market, though low penetration and density rates suggest there is still scope for further growth. After a fall in premiums in 2015, the insurance market is expected to return to more positive territory in 2016 and we expect to see both life and non-life premiums record steady, single-digit growth throughout the forecast period between 2016 and 2020, bolstered by rising employment rates and improvements to average household income levels.

Headline Insurance Forecasts (Poland 2013-2020)
2013 2014 ...

Medical Devices

Poland Medical Devices

BMI View:

B MI View : In US dollar terms, we expect the Polish medical device market to grow by 2.2% in 2016, compared with a double-digit contraction in 2015, as the local currency depreciates to a lesser extent against the US dollar. Good economic performance and the expansion of the private healthcare sector will drive market growth.

...
Projected Medical Device Market, 2014-2019
Total (USDmn) Per Capita (USD)

Metals

Poland Metals

BMI View:

BMI View: Tin prices will be capped by US dollar strength in 2016, leading us to trim our price forecast to USD14,500/tonne. Beyond 2016, prices will recover gradually as the global tin market posts sustained market deficits and inventories dwindle.

...
Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Poland Metals

BMI View:

BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

...
Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Poland Metals

BMI View:

BMI View: Globally, iron ore prices will remain subdued due to weak demand growth in China and expanding output by major miners in Australia and Brazil. China will see output slow as the country's iron ore miners operate on the higher end of the global iron ore cost curve.

...
Global Iron Ore Forecast
2014 2015e 2016f 2017f 2018f

Poland Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

...
Global Nickel Forecasts
2013 2014 2015e

Poland Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Poland Metals

BMI View:

BMI View: Gold prices will prove resilient in 2016 due to a dovish shift in global monetary policy and elevated systemic financial sector risks. However, we do not foresee a sustained multi-year recovery and the mining sector will thus remain under significant stress. We forecast slowing mine production growth and increasing consolidation.

BMI Gold Forecasts
2014 2015 2016f 2017f ...

Poland Metals

BMI View:

BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Poland Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

...
Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Poland Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

...
BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f

Mining

Poland Mining

BMI View:

BMI View: Growth in the Polish mining sector will be modest over the coming years. The coal sector will be overhauled as the government seeks to either restructure or close unprofitable mines. Copper output will struggle as falling copper ore grades and weak prices are set to hinder growth. Nevertheless, the rate of growth we forecast indicates that the country will remain one of the most significant players in the European coal, silver and copper markets.

Modest Growth Across A Range Of Minerals
Poland - Mine Output
...

Oil & Gas

Poland Oil & Gas

BMI View:

BMI View: We have downgraded Poland's long-term gas production outlook, removing any contribution in growth from shale gas. The slow pace of exploration is unlikely to pick up in the coming years, tempering the development of below-ground understanding and optimised drilling and hydraulic fracturing processes required for Poland's challenging geology. Conventional gas exploration and developments will slowly boost gas production over our forecast period.

Headline Forecasts (Poland 2013-2019)
2013 ...

Petrochemicals

Poland Petrochemicals

BMI View:

Polish polymer output growth was in double figures in 2015 as the automotive industry rebounded and exports improved. There is plenty of capacity available for similar rates of growth over the near term, but with insufficient local hydrocarbon resources BMI doubts there is a basis for further capacity investment.

In 2015, ethylene production was up 15.8% year-on-year (y-o-y) to 545,000 tonnes, polyethylene output was up 11.5% to 376,000 tonnes, polypropylene increased 10.5% to 245,000 tonnes and polyvinyl chloride rose 16.7% to 321,000 tonnes. However, there is plenty of room for growth even within current capacities. In 2015, Poland had olefins of 760,000 tonnes per annum (tpa) of ethylene, 475,000tpa propylene and 60,000tpa butadiene. Polymer capacities include 320,000tpa high-density polyethylene, 170,000tpa low density polyethylene, 400,000tpa polypropylene, 550,000tpa polyvinyl chloride, 90,000tpa polystyrene and...

Pharmaceuticals & Healthcare

Poland Pharmaceuticals & Healthcare

BMI View:

BMI View: The impending shift to a tax-based healthcare system will provide enticing revenue earning opportunities for multinational pharmaceutical firms operating in Poland, while the country's increasing pensionable population will drive demand in high-value medicines for the treatment of chronic diseases, such as cancer and cardiovascular diseases. However, the government's ambitious spending initiatives risk overstretching finances in the future, forcing it to moderate a number of its plans for the sector.

Headline Expenditure Projections

  • Pharmaceuticals: PLN33.39bn (USD8.86bn) in 2015 to PLN34.76bn (USD8.61bn) in 2016; +4.1% in local currency terms and -2.8% in US dollar terms. ...

Power

Poland Power

BMI View:

BMI View: Recently elected Order and Justice (PiS) government's support for coal-fired generation and proposed punitive requirements for wind power developers will dampen investor interest and ensure the country's continued reliance on the strategically important coal sector for power generation. This will put Poland at odds with the EU over emissions and environmental targets.

...
Headline Power Forecasts (Poland 2015-2021)
2015e 2016f

Real Estate

Poland Real Estate

BMI View:

BMI View : Buoyed by a steady and robust economy, the medium-term outlook for Poland's real estate sector is bright. Strong growth in service sector output should drive demand for office space. The retail real estate sector should benefit from the impact of higher purchasing power and consumer spending which will increase retailers' requirements for space, while the industrial market is likely to be positively impacted by the increase in trade as well as on-line retailing and e-commerce, which will help to increase demand for storage space and ensure market dynamism.

The Polish economy is expected to see strong steady growth over the next five years. GDP is forecast to pick-up next year to 4.0% and to average at 4.2% per annum over the period 2017-19. An affluent population, rising private consumption and a strong manufacturing and external sector will ensure all three markets in...

Renewables

Poland Renewables

BMI View:

BMI View : Mounting political risks in Poland made us substantially downgrade our forecasts for the growth in the Poland's renewables sector. The newly elected Law and Justice (PiS) government holds a robust support for the domestic coal sector, while at the same time proposing a number of restrictive legislations for the development of renewable energy sources, particularly the wind power segment. We believe this will result in a deteriorating operating and investment environment for the renewables' developers.

Latest Updates and Structural Trends

  • Considering mounting political risks, we have substantially downgraded our forecast for the growth in Poland's renewables sector. We now expect the non-hydro...

Retail

Poland Retail

BMI View:

BMI View: Economic recovery and growth over the forecast period will directly benefit the retail sector. Reducing unemployment, a swelling middle class and substantial growth in household incomes will provide for improving levels of disposable income that will benefit retailers through higher levels of spending in the market. While Warsaw and medium sized cities offer the greatest rewards for retailers, there will be a noticeable shift in opportunities towards more rural areas as competition in the larger markets intensify.

Household spending, which was growing consistently in 2013-2014, is going to post a slump in 2015 in terms of US dollar. Appreciation of US dollar will be the main determinant of the 12.7%...

Telecommunications

Poland Telecommunications

BMI View:

BMI View: The Polish telecommunications market is one of the fastest-changing in the Central and Emerging Europe region. This is linked to its large and competitive retail and wholesale services markets as well as extensive deployments of high-capacity next-generation active and passive infrastructure. Mobile and wireline operators report rising usage of premium non-voice services as well as growing demand for complex, multi-screen converged services. However, operators face a lack of 4G spectrum. The auction of 4G 800MHz and 2600MHz spectrum took place recently but it was an event shrouded in a lot of controversy and the costs turned out to be much higher than operators had anticipated.

Latest Updates & Industry Developments

  • We have made...

Tourism

Poland Tourism

BMI View:

BMI View: Poland has a relatively well-established tourism industry, supported by a growing business travel sector and robust domestic tourism market. The country benefits from a positive location in between key source markets in Europe and has an extensive transport network, including cross-border road and rail connections and growing air travel capacity. The hotel market has undergone significant expansion in recent years, benefiting from Poland's openness to foreign investors as well as development in the run-up to Poland's hosting of major sporting events. Moving forward, we expect to see slow growth in international tourism arrivals to Poland. The country faces significant competition from other European destinations,...

Water

Poland Water

BMI View:

BMI View:

In recent years and, indeed, currently, the Polish water sector has undergone a significant amount of work. The Polish government are keen to continue developments that were initially brought about by the need to comply with EU regulations. The country has a limited amount of natural water sources and is, therefore, putting emphasis on sustainable water usage and efficient wastewater treatment. Not only will this ensure that demand is met, but will also protect the precious natural resources from becoming polluted by untreated wastewater - a very real threat with the ever-increasing number of households becoming connected to mains water. With this continuing growth and the potential privatisation of the sector in the near future, the investment environment is very attractive.

Currently, the Polish water sector is mostly government-run. This has resulted in a sector that is very well...

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