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 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 2017.
The right-wing Law and Justice government will continue to slightly widen the fiscal deficit, and now expect Poland to breach the 3.0% of GDP Maastricht criteria threshold in 2017.
Changes To Forecasts
On the back Brexit induced uncertainty we have revised our real GDP growth forecasts down. We now forecast France's economy to expand by 3.6...
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: 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...
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
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 (22)
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.
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Poland Commercial Banking
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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: We forecast total IT spending will increase at a CAGR of 5.9% throughout 2016-2020 to PLN34.0bn, with a substantially faster USD CAGR of 10.6% as zloty appreciation boosts performance from 2017. Appreciation will boost the hardware segment, where there is pent-up replacement demand and potential for rising average selling prices, but it is software and services where we still forecast outperformance. There is, however, some potential downside from zloty appreciation, which would be a squeeze on the competitiveness of Poland's large IT industry, where it is a major regional centre for hardware, software and...
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 ...
BMI View: Poland's insurance market offers significant potential for growth. Rates of coverage in both the life and non-life sectors remain underdeveloped compared to that of Western Europe insurance markets, and positive growth indicators, including rising employment and income rates, are in place. The market is home to several large domestic providers, many of which have expanded throughout the Central and Eastern Europe region, and some major multinationals have also entered the market, bringing capital and expertise to the insurance segment. While premiums are expected to grow moving forward, we do note Poland's exposure to weakness in the eurozone which creates some...
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: Growth in the Polish mining sector will be modest over the coming years. The coal sector will be overhauled as the government seeks to restructure 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.
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.
BMI View: The Polish petrochemicals industry is facing plenty of downside risk as a result of the potential effects of a Brexit-induced slowdown in manufacturing exports. Already, petrochemicals margins are under pressure and some polymer segments, notably polyethylene, saw declines in production in H116. Nevertheless, the industry is investing in new capacity, with 100,000tpa of extra polymer-grade propylene capacity available from 2018.
Polish petrochemicals producer PKN Orlen has pledged to expand propylene capacity to 550,000 tonnes per annum (tpa), a decision that appears to be justified by the 7.2% y-o-y growth in polypropylene output to 135,000 tonnes in H116. Overall plastic output rose 4.7% over the period. However, the local market in other polymers has come under...
Pharmaceuticals & Healthcare
Poland Pharmaceuticals & Healthcare
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
BMI View: Poland's power sector will remain dominated by coal-fired generation across the coming decade, as the country's PiS government continues to favour this strategically important sector over gas-fired generation and non-hydro renewables. Recently adopted punitive requirements for wind power development reaffirm our view and will dampen investor interest. As such energy policies will continue to drive a wedge between Poland and the EU over emissions and environmental targets.
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...
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.
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: 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,...
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...