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

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Core Views

  • Poland's robust real GDP growth will continue throughout 2016 and 2017, driven mainly by household consumption and fixed investment.

  • 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 right-wing Law and Justice government will continue to slightly widen the fiscal deficit, but we expect Poland not to breach the 3.0% of GDP Maastricht criteria threshold.

Key Risks

  • Markets will continue to be wary of Law and Justice policies. This will keep the zloty relatively weak and government bond yields high by regional standards.

  • An economic slowdown in the eurozone,...

Poland Operational Risk Coverage (9)

Poland Operational Risk

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BMI View: Poland attracts considerable foreign investment as it boasts strong economic growth, a well diversified manufacturing sector and large mining industry along with low corruption levels. Investors also benefit from the well developed domestic financial market, access to a broad range of financial services, and a competitive tax environment. However, the Law and Justice (PiS) government's plan to introduce investor-hostile policies and its assault on Poland's constitutional court raise risks for investors. Poland also 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 obtains an overall score of 68.0 out of 100 in BMI'...

Poland Crime & Security

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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

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BMI View: Investors considering basing a business in Poland stand to benefit from many positive aspects of the country's labour market. Poland has one of the largest working age populations in the region, and the country's excellent educational system means that this potential workforce boasts a high skill level, reducing the necessity for additional training or foreign skilled labour. There are, however, also considerable risks, namely the high minimum wage and labour taxes which significantly increase the cost of labour in the country. A lack of well remunerated opportunities within Poland is also resulting in a large-scale emigration of graduates to countries which offer better opportunities. Overall, however, Poland remains a strong performer on the BMI Labour Market Risk Index, with a score of 58.1 placing the country 1...

Poland Logistics

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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 ...

Poland Trade & Investment

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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 (22)

Agribusiness

Poland Agribusiness

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BMI View: Milk prices have remained low into Q116, 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...

Autos

Poland Autos

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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

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

Consumer Electronics

Poland Consumer Electronics

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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

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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

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BMI View: Poland's food and drink industry will experience positive growth over our forecast period to 2020, and a positive economic outlook will drive consumer spending as private consumption remains strong over 2016. High levels of self-sufficiency in the country's dairy and meat sector will drive stronger growth in food sales, as well as a positive outlook on the development of organised retail. Growth in the Polish drinks industry will remain positive, with rising health concerns driving growth in high-value segments.

Food & Drink Spending
(2013-2020)
...

Freight Transport

Poland Freight Transport

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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: Poland has a large IT industry and is a major regional centre for hardware, software and services - as well as being a large domestic market for products and services. We have a bright outlook for Poland over the medium term and expect the market to recover strongly after an abrupt deceleration in 2015when zloty depreciation and product trends in the hardware segment hit the market. This trend should reverse and zloty appreciation is expected to provide upside to the hardware segment over the medium term, while the software and services segments will grow based on product trends and local enterprise modernisation. We forecast total IT spending will increase at a CAGR of 6.3% over 2016-2020 to PLN34.8bn.

Latest Updates & Industry Developments

  • Computer Hardware Sales:...

Infrastructure

Poland Infrastructure

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BMI View : Poland's construction industry is poised for growth over the first half of our forecast period, driven primarily by investment into transport infrastructure, the largest sector in nominal value terms and main beneficiary of EU funding. We also anticipate robust growth in residential construction - already the largest residential market in the CEE region - on the back of a series of housing programmes ...

Insurance

Poland Insurance

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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

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B MI View: We expect the Polish medical device market to grow by a CAGR of 4.4% in US dollar terms over the 2014-2019 period, due to good economic performance and rising health expenditure. The expansion of the private healthcare sector is also increasing demand for medical devices. Poland is heavily reliant on imported medical devices despite its strong industrial base, as domestic producers are unable to compete with Western companies in terms of product quality...

Mining

Poland Mining

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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

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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

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Polish polymer output growth diminished in Q116 alongside declining petrochemicals margins, amid increased oil price volatility. However, the outlook for the rest of the year is positive, with exports set to surge as Germany's economy picks up and Polish domestic demand strengthens.

With production well under nameplate capacity, Poland has plenty of potential for high rates of growth, even without further capacity expansion. In Q116, Poland's polymer sector witnessed an overall positive performance, with polyethylene output up 1.2% y-o-y to 97,900 tonnes and polypropylene up 4.8% to 25,500 tonnes, although PVC was down 11.2% to 72,500 tonnes. However, growth rates were slower than the level achieved in 2015, indicating that the industry was facing slower domestic demand and continued to be operating well below its full potential.

The Polish petrochemicals industry continues to draw investment and is...

Pharmaceuticals & Healthcare

Poland Pharmaceuticals & Healthcare

BMI View:

BMI View: Poland will remain one of the most attractive pharmaceutical and healthcare markets in the CEE region. Strong economic growth and the introduction of a tax-funded healthcare system will support strong market growth. Opportunities for innovative drugmakers will be significant, with an ageing population and increasing accessibility for advanced treatment. However, the potential for the formation of a Visegrad joint medicine agreement with the Czech Republic, Hungary and Slovakia pose both upside and downside risks to innovative drugmakers should it go ahead, as joint purchasing initiatives tend to bring pricing pressures which would boost sales whilst reducing profit margins.

Headline Expenditure Projections

  • ...

Power

Poland Power

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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 : We maintain our subdued outlook for the development of Poland's non-hydro renewables industry as the country's Law and Justice (PiS) government is implementing restrictive measures to slow down expansion of the wind power sector. We believe these requirements will have an adverse impact on the deployment of new wind power projects as well as the operating environment of existing projects, while the regulatory uncertainty will likely deter investors from entering the country's renewables market.

Renewables Headline Forecasts (Poland 2015-2021)
2015e ...

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

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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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