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.
Poland Country Risk
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
Poland Operational Risk
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
Poland Crime & Security
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
Poland Labour Market
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...
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
Poland Trade & Investment
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 (23)
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...
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|
|f = BMI forecast. Source: National sources, BMI|
|* Buoyant capital...|
Poland Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Poland Consumer Electronics
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
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: 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,...
Poland Freight Transport
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...
Poland Information Technology
BMI View: Poland's IT market slowed in 2015 as a result of a downturn in the hardware segment, where zloty depreciation and downturns in the product cycle resulted in a contraction in spending. The medium-term outlook is much brighter than 2016 and we consider Poland to be one of the more attractive IT markets in the region as it develops economically including an expansion of the middle class. This will occur alongside improvements to supporting infrastructure such as network reach and capacity which will have positive spillover effects, particularly for the software and services segments in product categories such as cloud computing and...
BMI View : Overall we hold a positive outlook for Poland's infrastructure sector over the ten year forecast period to 2025, with average annual growth in construction industry value of 3.7% expected. Much of this growth is dependent upon EU funding for a range of projects designed to integrate Poland's transport and utilities infrastructure more closely with its regional neighbours. As such we caution that deteriorating relations with the EU have the potential to derail growth and deter potential investors and contractors, particularly in light of increasing state intervention in the energy sector.
Transport infrastructure continues to attract major public investment. In October 2015 the Polish General Directorate of National Roads and Motorways (GDDKiA) signed contracts worth PLN3....
BMI View: Poland's insurance market is relatively well developed, with healthy levels of penetration and density, though it continues to lag behind more established European markets. Following a short-term contraction in premiums (in US dollar terms) due to currency movements, we expect to see sustained growth in both the life and non-life insurance sectors, based primarily on wider economic growth prospects. The market is dominated by PZU; however, opportunities for foreign entrants and expansion remain and we would expect to see further consolidation amongst the smaller firms moving forward, particularly as the regulatory environment is enhanced and solvency requirements tightened.
Poland Medical Devices
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...
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...
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: 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.
The Polish petrochemicals industry is witnessing strong growth amid solid economic fundamentals that are supporting local manufacturing. The background of growth is encouraging local producers to step up their acquisitions as they seek to diversify their production base and secure feedstock.
In the first nine months of 2015, polyethylene output was up 12.7% y-o-y to 281,000 tonnes, polypropylene increased 12.3% to 187,800 tonnes and polyvinyl chloride rose 16.4% to 244,400 tonnes. The rate of output growth came on the back of the robust recovery in domestic demand, although there are strong upside risks to these forecasts. In 2016, construction growth of 4.7% is likely to stimulate plastic piping and PVC sheet consumption, while 1.1% growth in vehicle output following 15.1% growth in 2015 should provide a robust climate for engineering plastics and synthetic rubbers.
Polish petrochemicals producer PKN...
Pharmaceuticals & Healthcare
Poland Pharmaceuticals & Healthcare
BMI View: The Polish healthcare system faces significant reform under the newly elected Law and Justice party. We believe that a transition from Poland's current insurance based healthcare system to a tax financed healthcare system will be broadly positive for all stakeholders, including the pharmaceutical sector, as it will provide a more stable and larger source of revenue. Reimbursement criteria will also be loosened for innovative drugs, which in turn will be beneficial for multinational drugmakers operating in Poland.
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 unchanged from last quarter.
BMI View: A PiS victory is the most likely outcome of Poland's parliamentary elections - with the party's populist brand of politics likely to mean it is more vehement than the incumbent Civic Platform in its support for the domestic coal industry. As a consequence, we anticipate an even more fractious relationship with the EU over climate targets and a greater willingness to intervene in the state-controlled utilities sector to support Poland's coal miners, at the expense of minority shareholders.
Poland Real Estate
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...
Latest Updates and Structural Trends
We maintain our forecast that non-hydro renewables' contribution to Poland's total electricity generation mix will remain fairly limited, rising from 14% in 2014 to 18% in 2024.
Biomass sector will remain the largest generator of renewable energy in Poland, accounting for 58% of the total non-hydro renewables generation in 2024 (down from 65% in 2014).
We believe that Poland's largest opposition party, Law and Justice (PiS) will be best positioned to form the next Polish government following the October 2015 parliamentary election. The party's hostility to wind power would prompt a downwards revision to our wind power forecasts, should it be successful in forming a government.
The introduction of...
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%...
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...
BMI View: We maintain our positive outlook for the Polish tourism industry, though the combination of the collapse in the Russian rouble and the weak euro will constrain arrivals from key markets over 2015 as many opt to holiday domestically or remain within the currency union. Beyond 2016 we expect steady growth in arrivals, boosting receipts and supporting continued appetite for investment and expansion in Poland's accommodation sector.
Poland benefits from its location at the epicentre of Europe, with a large number of road and rail border crossings connecting it to some of its main tourism markets. The country...
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...