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 economic recovery in now in full swing as domestic demand gathers momentum. We have upgraded our growth forecasts on the back of stronger exports, as the weak euro and low oil prices stimulate demand across the German supply chain.

  • Poland's external position remains relatively strong and we estimate the current account deficit arrived at just 1.6% of GDP in 2014. However, a large stock of foreign-owned government paper and ongoing private sector deleveraging represent the two major risks to our sanguine outlook.

  • We continue to expect the Civic Platform (PO)-led government to serve out its term under new Prime Minister Ewa Kopacz. We also believe that the opposition will struggle to broaden its appeal despite the rising government unpopularity, limiting its ability to challenge the ruling coalition.

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Poland Operational Risk Coverage (9)

Poland Operational Risk

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BMI View: Poland poses risks to investors in the form of limited labour force size (with highly educated workers emigrating in search of better pay), comparatively high labour costs and powerful unions, under-developed and poorly maintained transport infrastructure and costly utilities. However, these are counterbalanced somewhat by the relative openness of the market to investment, well-developed financial markets, limited government intervention and one of the best higher education systems in the world. Moreover, there are extremely limited terrorism risks and minimal interstate crisis potential. Due to these considerations, we award the country an overall Operational Risk score of 65.9 out of 100, leaving it in sixth place out of 29 emerging Europe states and 32nd place globally out of 170 countries.

The labour market offers the most advantages and the most risks to incoming businesses...

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Poland Crime & Security

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BMI View: Poland is generally a safe place for foreign business travellers, expatriates and tourists, with the main threats being petty crime and robbery rather than violence or acts of aggression. There are also limited interstate security risks thanks to its membership of the NATO alliance, and the country is not an attractive target for international terrorist groups. This is reflected in Poland's score of 78.4 out of 100 for Crime and Security Risk, which ranks it in sixth place out of 29 states in the Emerging Europe region.

There is a generally low risk of crime affecting foreign workers and businesses. Poland has considerably less organised crime than its eastern neighbours Ukraine and Russia, and newer members of the EU...

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Poland Labour Market

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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...

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Poland Logistics

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BMI View: Poland offers a developed logistics network providing direct access to international supply chains. Investors will benefit from the minimal number of trade procedures and low trade costs that make the country a regionally attractive destination to companies. Investors in Poland do, however, face some risks in the utilities sector, with the threat of rising fuel and electricity costs having the potential to negatively impact the bottom lines of companies with operations in the country. The overall stability of Poland's supply, however, will continue to attract investors and is highlighted in Poland's score of 60.2 in the BMI Logistics Risk Index, ranking the country sixth in E...

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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 ...

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Poland Industry Coverage (24)

Agribusiness

Poland Agribusiness

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BMI View: Plummeting prices of milk and sugar in the EU over 2014/15 may be giving Polish producers of these commodities a taste of the possible downsides of deregulation in advance of reforms to EU quota systems. The Polish government is lobbying for EU support on behalf of the dairy industry, but in the long run it will take exploitation of overseas markets to secure the future wellbeing of the sub-sector. Wheat prices have also fallen in H115 as another strong harvest is expected across the EU. Yields in Poland will be slightly down on the previous year, but the longer-term trend for improved output per hectare suggests improvements in farming practices are laying stronger foundations for future productivity. The...

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Autos

Poland Autos

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In 2015, BMI forecasts total vehicle sales in Poland to increase 6.2%, to 416,221 units. This comes on the back of a forecasted 5% increase in passenger car sales led by an uptick in private consumption and a 12.5% increase in commercial vehicle (CV) registrations.

We believe the expansion in car sales seen in 2014 will continue throughout 2015 growing by 5% to 343,580 units, owing to our Country Risk team's bullish assessment of private consumption fundamentals. Consumer spending will be boosted by low interest rates, a low household debt burden, growing employment and wages as well as low inflation, which, in turn, will all filter through into demand for big-ticket purchases such as cars.

In 2015, we forecast CV sales to expand 12.5% driven by a 12.3% expansion in light commercial vehicles (LCVs) alongside 13.3% and 9.9% growth in the heavy truck and bus segments, respectively....

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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

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Consumer Electronics

Poland Consumer Electronics

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BMI View: We downgraded the forecast for Poland's consumer electronics market in 2015 to reflect our in-house Country Risk team's bearish view for zloty performance against the US dollar, which will see household purchasing power eroded. From 2016, we expect the market to return to growth, driven by underlying income growth and the popularity of product categories including smartphones and tablets. Meanwhile, in terms of electronics production, the domestic scene has a number of strong local players able to create affordable products for the Polish market....

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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...

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Food & Drink

Poland Food & Drink

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BMI View: We hold a positive outlook on the Polish consumer over the next few years, after several years of sluggish growth. We expect real GDP growth of 3.5% in 2015 and 3.9% in 2016, which will be fuelled by strong private expenditure growth of 3.0% in 2015 and 4.0% in 2016. In line with the recovering economic situation, we expect the Polish food market to register increasingly stronger growth rates in absolute and per capita terms over our forecast period 2014-2019. However, Russia's ban on agricultural imports from EU countries will continue to damage fruit and vegetables producers in Poland, which exports much of their produce to Russia...

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Freight Transport

Poland Freight Transport

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BMI View: 2015 will see expansion across all the main Polish freight transport modes. This will reflect the gathering pace of the economic recovery, led by the consumer sector as well as expansion of foreign trade. The fastest cargo volume growth will be experienced in road haulage, followed by airfreight, with rail freight bringing up the rear, but still achieving growth of over 2%. Some freight modes will have the additional benefit of increases in capacity or extra demand because of Poland's role as a gateway into north-eastern Europe.

As BMI has been expecting, the Polish economy is now being driven forward by a recovery in domestic demand supported by growing exports, as the German supply chain...

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Information Technology

Poland Information Technology

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BMI View: We see Poland as one of the most attractive IT markets in the region over the medium term, based on relatively low IT device and solution penetration, our robust economic outlook and improvements to supporting infrastructure such as network quality and capacity. This will have positive spillover effects, particularly given its overall growth in technology trends towards increased software and services spending. Enterprise and government spending has a stronger outlook over the medium term, in part supported by the distribution of EU funds for ICT and information society-related initiatives. However, we expect growth will be subdued in 2015 compared to 2014 and 2016-2019, as technology cycles and depreciation of the zloty limit the growth rate.

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Infrastructure

Poland Infrastructure

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BMI View : We forecast a strong recovery for the Polish infrastructure sector, with growth averaging 3.8% over the next five years. The residential and energy sectors will be the key drivers for growth. Furthermore, a new tranche of EU funding is likely to bolster government infrastructure spending and rising GDP per capita will boost the residential construction sector.

Poland's construction experienced lukewarm growth of 1% in 2013 while more than 300 companies in the industry faced bankruptcy - including some of the country's largest builders. Following this, 2014 has shown strong signs of recovery with...

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Insurance

Poland Insurance

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BMI View : With interest rates at record lows and private consumption rapidly increasing, Poland offers multinational insurers and other investors a myriad of opportunities. Significant opportunity still lies in the low penetration of the market comparative to other Western European markets despite Poland boasting the largest insurance market in Central and Eastern Europe. Moreover, the strong macroeconomic backdrop and the revival of Polish households' appetite for risk and organised savings will also be key drivers in the segment and contribute to our positive outlook for the overall segment.

A robust economy has helped support steady growth across both the life and non-life segment in recent years. Q1 2015 saw rapid real wage growth with average wages expanding by 4.9%. In addition to this, low interest rates, higher rates of job creation...

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Medical Devices

Poland Medical Devices

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BMI Industry View: We expect the Polish medical device market to grow by a CAGR of 7.7% over the 2013-2018 period, due to the strengthening of the economy, and subsequently, medical device imports. Poland is heavily reliant on imported medical devices and this is expected to remain the case for the time being, as no major developments are foreseen for the domestic medical device industry in the short-term.

Headline Industry Forecasts

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Metals

Poland Metals

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BMI View: The fortunes of Poland's steel and copper sub-sectors are likely to diverge over the next few years as robust growth in steel production levels contrasts with sluggish expansion in copper output. The expansion in domestic autos production and construction activity will provide much of the drive for steel consumption and output, which, in contrasts, Polish copper producers appear to be shifting production increasingly overseas.

We expect the steel industry to be the main driver of growth in Poland's metals sector over 2015 and beyond as a steady rise in domestic consumption generates reliable demand for local steel mills. Data from the World Steel Organisation shows Poland's steel output to have grown by about 11% year-on-year (y-o-y) during the first four months of 2015 and we expect this momentum to carry through the coming quarters. A robust Polish economy...

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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
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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 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 2014e...

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Petrochemicals

Poland Petrochemicals

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BMI View: Although Polish polymers output declined in the first two months of 2015, BMI 's latest Poland Petrochemicals Report remains upbeat about the industry's prospects for the rest of the year. The automotive industry in particular will boost domestic consumption of engineering plastics and synthetic rubbers.

Strong household consumption on the domestic market coupled with a reactivation of export markets should boost polymers consumption in Poland, where there is a high level of backward integration within the manufacturing sector. Polish exporters are tightly integrated into the German manufacturing supply chain, and the weaker euro is helping to support demand globally for German exports. Moreover, the automotive industry, which exports 90% of its output, is set for a recovery with growth of 5% in 2015.

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Pharmaceuticals & Healthcare

Poland Pharmaceuticals & Healthcare

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BMI View: The National Health Fund and the Agency for Health Technology Assessment will continue to impede the reimbursement of innovative drugs in Poland over the short term, given their current focus on budgetary restraint. Over the longer term, we expect these budgetary restrictions to ease and healthcare spending to accelerate, given our positive economic outlook for Poland. In light of our expectations, Poland will become a more attractive market to multinational drugmakers.

Headline Expenditure Projections

  • Pharmaceuticals: PLN32.04bn (USD10.15bn) in 2014 to PLN33.39bn (USD8.91bn) in 2015; +4.2% in local currency terms and -12.2% in US dollar terms. Forecast revised downward from last quarter.

  • Healthcare:...

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Power

Poland Power

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BMI View: Government intervention in the utilities segment is a pertinent risk to our forecasts for growth in the Polish power sector - as the government prioritises plans to push ahead with large-scale coal power projects at the expense of the financial health of state-backed power companies. This sends out a damaging message to the private sector, which could ultimately weigh on private investment in all segments of the power market.

High levels of political and operational uncertainty will constrain growth in Polish power generation and capacity over our 10-year forecast period. The biggest risk to our forecasts - and investors in some of the Poland's partially privatised utilities - is government willingness to intervene directly in the power market to support ailing state-owned mines, ensure energy prices remain low and achieve energy security.

This strategy...

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Real Estate

Poland Real Estate

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BMI View: Further macroeconomic growth in 2015 is set to provide the Polish commercial real estate sector with the basis for its continuous upward trend. International investors and growing domestic consumer confidence are two main factors in improving demand levels. Poland therefore continues to defend its position as the most stable and commercially attractive market in the region.

Through a focus on the principal cities of Warsaw, Krakow and the Tricity area, the Poland Real Estate report examines the commercial office, retail, industrial and construction segments in the country. With the wider macroeconomic situation in Poland expected to improve further in 2015, investments in the commercial real estate sector are also bound to...

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Renewables

Poland Renewables

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BMI View: Poland's reluctance to adopt stringent EU emissions targets for 2030 sends warning signals to potential investors in the country's renewables industry. Poland's wavering support for renewable energy and - by extension - the uncertain regulatory environment has long been a key concern, undermining the long-term growth prospects of the sector. This uncertainty is reflected in what was believed to be, in April 2014 the final approval by the Polish government of the RES law: on the contrary, in October 2014, the Ministry of the Economy submitted to parliament a set of additional proposed amendments. The final draft of the act on renewable energy sources was finally adopted by the Polish parliament on 20 February 2015. The Act will now be put forward for the Polish president's signature. The...

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Retail

Poland Retail

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BMI View: Stable economic growth in Poland will lead to tangible gains for retailers. In zloty terms, total household spending is set to maintain a 4.9% compound annual growth rate until 2019. Retailers in food and non-food retail sub-sectors will be expanding their operations as new supermarkets and shopping centres continue to open. However, the election of new president Andrzej Duda can potentially make the market more conservative and robust.

The current expansion of Poland's economy will extend into 2015 and beyond until the end of the forecast period in 2019. Strengthening domestic consumption and growing exports will fuel the country's economic ascent. In nominal zloty terms, the GDP will average a 5.2% compound annual growth rate during 2015-2019. Inflation will preserve a very low or even negative rate in the first half of the forecast period and will pick up a higher...

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Shipping

Poland Shipping

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Both Gdansk and Gdynia To Do Well This Year

Polish ports will have a good year in 2015. We are now predicting cargo volume growth in the 6-9% range - very encouraging against the context of the rest of Europe. GDP expansion, a continuing trade recovery (despite some worries over export demand), the beneficial effects of capacity expansion, and Poland's important gateway role will support growth. Both key ports - Gdansk and Gdynia - will see tonnage and box traffic rising at a healthy rate.

As BMI has been expecting, the Polish economy is being driven forward by a recovery in domestic demand supported by growing exports, as the German supply chain receives a boost from a weak euro and low oil prices. There are some potential problems on the horizon, but we believe these are not serious enough to alter a generally positive picture. One is a strengthening Swiss franc...

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Telecommunications

Poland Telecommunications

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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. Premium customers, although still in the minority, account for the majority of retail service revenues and operators that respond with compelling and attractively-priced products will be those that endure. Netia 's purchase of TK Telekom highlights the potential of the under-served B2B market while P4 's rapid...

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Tourism

Poland Tourism

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BMI View: The ongoing tensions between Russia and Ukraine will substantially affect our forecasts over the next year or so, as Ukraine is traditionally one of the largest source markets for the Polish tourism industry, and also represented the most popular destination for outbound tourists in previous quarters. However, owing to the continued security issues represented by the Russian appropriation of Crimea, we have revised down our forecasts for these indicators, as we do not believe that as many Ukrainians will opt for costly foreign holidays, nor do we view Ukraine as an attractive holiday destination at present.

The Ukraine/Russian conflict represents the largest threat to the continued growth of the Polish tourism sector at present, as Ukraine has long...

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Water

Poland Water

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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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