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...

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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

Autos

Poland Autos

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: Our positive outlook for Poland's economic recovery factors in to our strong projections for the consumer electronics market during 2015-2019, which will be boosted by sales of smartphones and tablets due to rising purchasing power. The domestic scene has a number of strong local players, able to create affordable products for the Polish market. Our core scenario is for continued growth in consumer electronics spending, as we forecast a CAGR of 3.1% 2015-2019.

Headline Expenditure Projections

  • Computer Hardware Sales: USD3.9bn in 2014 to USD3.7bn in 2015, -4.5% in US dollar terms. Slight decline in tablet will add to the squeeze on market value from price erosion in the notebook 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

Freight Transport

Poland Freight Transport

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Positive Outlook for Freight Transport in Poland

We continue to predict growth for Polish freight transport in 2015. In most modes volumes will edge slightly ahead of the pace of expansion experienced in 2014. This will come on the back of slightly faster GDP and trade growth in the country. 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. Reflecting the rapid development of its capacity, as well as its good business links, the port of Gdansk will see gross tonnage growth of 6.1%. Road freight will also do well, with cargo volume up by a healthy 4.8%.

We have edged up our outlook for the Polish economy relative to our last quarterly report, although we remain below consensus. We believe GDP will expand 3.2% in 2015 (3.1% previously) after estimated growth of 3.1% in 2014 (2.8%...

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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, as the recovery in domestic demand in Poland is now in full swing, fuelled by positive employment trends, falling prices and record low interest rates. This will have positive spillover effects for the IT sector, 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.

Headline Expenditure Projections

  • Computer Hardware Sales: PLN12.217bn in 2015 to PLN14.146bn in...

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Infrastructure

Poland Infrastructure

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BMI View : BMI has upgraded its outlook for 2014 as market data shows a stronger recovery, in particular from the residential and transport sectors. A new tranche of EU funding and a number of approved road and rail projects add further upside to our forecast. As such, we expect annual average growth of 5.5% between 2015 and 2018.

Poland's construction sector experienced a 9% contraction in 2013, in line with our estimate for a 10% contraction, and wiping PLN11.8bn off the total industry value, while more than 300 companies in the industry faced bankruptcy - including some of the country's largest builders. 2014 saw strong signs of recovery with residential construction up 17% in the first 10 months and...

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Insurance

Poland Insurance

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BMI View : As the largest insurance market in Central and Eastern Europe, Poland presents considerable opportunity for multinational insurers and other investors with penetration rates still extremely low relative to Western European markets. As market regulation improves and demand for insurance coverage increases, the country is seeing a steady flow of new entrants from the surrounding region with the growing presence of multinationals helping to drive steady premiums growth and a gradual improvement of standards of practice.

While total premiums growth in the Polish insurance market has been somewhat underwhelming over the past year, 2015 should see that market begin to outperform others in the Central and Eastern Europe (CEE) region as well as Western Europe. A stable economy and steady growth in employment and income...

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Medical Devices

Poland Medical Devices

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BMI Industry View: The Polish medical device market is expected 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 economic recovery in Poland continues to gather momentum, with leading and coincident indicators - particularly retail sales and wage growth - pointing towards improvements in domestic demand in addition to the export-driven real GDP growth that arrived in the second half of 2013. The acceleration in euro area growth, particularly in key trade partners such as Germany will continue to drive forward Polish export growth - especially in the autos sector. Furthermore, the recovery in international trade will continue to feed-through into the labour market, resulting in positive employment gains as hiring improves. This all bodes well for the metals industry in Poland, within which we are forecasting uninterrupted growth from 2014 through to the end of our forecast period in 2018.

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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.

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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 revised down our long-term gas production forecast due to recent disappointing shale drilling results. More time, additional exploration and below-ground data will be required to obtain a better idea of the country's actual shale gas potential and to optimise the drilling and hydraulic fracturing processes required for Poland's challenging geology. We have factored in a small and progressive uptick in shale gas production from 2020 onwards.

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Headline Forecasts (Poland 2013-2019)
2013

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Petrochemicals

Poland Petrochemicals

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Growth of just 0.1% in overall plastics production marked a gloomy year for Polish petrochemicals producers in 2014. Declines in major polymers and rubbers were only partly offset by a fall in naphtha feedstock prices later in the year. However, BMI's Poland Petrochemicals Report anticipates a stronger performance in 2015 when petrochemicals margins are expected to recover amid lower costs and improved export orders.

In 2014 Poland had olefins of 760,000tpa ethylene, 475,000tpa propylene and 60,000tpa butadiene. Polymer capacities include 320,000tpa high-density polyethylene (HDPE), 170,000tpa low-density polyethylene (LDPE), 400,000tpa PP, 550,000tpa PVC, 90,000tpa polystyrene (PS) and 120,000tpa polyethylene terephthalate (PET). In the fertiliser segment, it had capacities of 1.4mn tpa in both ammonia and urea.

In 2014, the main losers were PVC and polypropylene, which fell 10.1% and 10...

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Pharmaceuticals & Healthcare

Poland Pharmaceuticals & Healthcare

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BMI View: The Polish pharmaceutical market is heavily dependent on public healthcare spending; any negative economic developments will have an impact on the market in the short term. Over the past five years, Poland's economic outperformance has been vital to maintaining positive growth for the private and public healthcare sectors. While Poland's economy may continue to outperform in terms of growth, we believe that overall healthcare spending will remain muted over the coming year given the bleak macroeconomic outlook for Central and Eastern Europe. We highlight this as an ongoing risk to our projections, but maintain our current outlook for this sector's growth over 2015.

Headline Expenditure Projections

  • Pharmaceuticals: PLN33.68bn (USD10.75bn) in 2014 to PLN35.73bn (USD10.68bn) in 2015...

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Power

Poland Power

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BMI View: Coal will retain its central role in Poland's electricity generation mix - with the government focused on ensuring electricity prices remain low and bolstering energy security in the face of Russian aggression in Europe. In the run up to the 2015 general election, we expect the Polish government will seek to intervene directly in the power market to drive investment into new capacity, achieve its strategic aims and boost its poll ratings.

Our forecasts for the Polish power sector are underpinned by the country's strategy of burning cheap domestic coal for electricity generation. Coal will remain a critical component of the country's power mix in order to ensure electricity prices remain competitive, as well as to support Poland's politically sensitive coal mining industry. Coal will also ensure energy security amid fears Russia might...

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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...

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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 currently under discussion leading to another slippage in the law's final parliamentary approval.

Poland aims to derive 15% of its energy production from renewable sources by 2020, and we expect the wind and biomass segments to drive growth in the renewables industry. However, Poland remains...

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Retail

Poland Retail

Shipping

Poland Shipping

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Ports Of Gdansk And Gdynia To See 6-8% Growth

We continue to expect a strong performance from Polish ports in 2015. 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 in the 6-8% range.

We have edged up our outlook for the Polish economy relative to our last quarterly report, although we remain below consensus. We believe GDP will expand 3.2% in 2015 (3.1% previously) after estimated growth of 3.1% in 2014 (2.8% previously). One of the biggest drivers of growth is government spending ahead of parliamentary elections, expected in October. Before resigning to take a new post in the European Council, Prime Minister Donald Tusk announced a public spending package and we expect his...

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Telecommunications

Poland Telecommunications

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BMI View: Poland is one of the largest telecoms markets in Central and Eastern Europe, with vibrant competition across all market segments. High mobile penetration leads BMI to believe that the market will not have much scope for growth. Intense competition will also erode telecoms operator revenues. In the light of this, operators are targeting growth of high value, high-speed, fixed broadband subscription growth, as well as mobile broadband growth via dedicated subscriptions and smartphones. Two new services were introduced in the wireline sector, but BMI believes that they are unlikely to have a big impact on the market.

Key Data

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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...

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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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