Poland - growth and business opportunities - Business Works

Poland – continued growth & business opportunities

P oland passed smoothly through the storm of the global financial crisis. In 2009, the Polish economy was the only one in the EU to grow and this year, with real GDP growth expected to hit 3.4%, it is again set to be the bloc’s leading performer. Year-on-year in the second quarter, the economy grew by 3.5%, up from 3% in the first quarter.

The outlook for 2011 looks even better. It seems that the drive to converge with Western Europe will be even more successful and will be fulfilled faster than anyone could have predicted when Poland joined the EU in 2004. Indicators such as GDP, productivity, consumer spending and industrial production are showing better results than the average for the old EU15. Boosted by the EU funds and internal reform process, the Polish economy looks to be set to show a steady growth in short- and medium-term.

The stability of the Polish economy is one of the driving factors for investments into Poland. Strong macro-economic fundamentals and positive comparison with other countries, not only in direct vicinity, had a significant role in attracting Foreign Direct Investment (FDI), even in the midst of the crisis. According to preliminary data from the National Bank of Poland, in 2009 FDI inflow decreased 16% to the level of €8.4 billion, whereas the average global decrease of foreign investments reached 40%. As of April 2010, the Polish Information and Foreign Investment Agency is running 132 projects worth jointly €5.1 billion that will translate to some 35,000 jobs. The majority of the investments come from the US, with the UK and France making up the top three biggest capital sources.

One of the numerous attractions of the Polish market is the bulk of €90 billion in EU funds available for Polish-based investment projects. Further, the manufacturing co-operation of Polish companies with partners from the UE, including British companies, is steadily expanding and many of them decide to change the form of co-operation and invest directly in Poland. However, although bilateral trade and investment relations with the United Kingdom have seen a period of robust development since Polish accession to the EU, there is still room for even stronger ties between the two countries, especially in the area of FDI.

There are several sectors of Polish economy that draw most of the attention from foreign investors. For example, and what might even be a surprise to some, is that for several years pharmaceuticals has been one of the top performing branches of the economy. Both drug sales and employment in the sector have been steadily growing as have the exports. Just to prove the point, in 2007 Polish export of pharmaceuticals to the UK grew by 150% compared to the previous year with an increase of 70 per cent in British exports in the same period.

University of Warsaw Library
University of Warsaw Library

Now for the other surprise: Poland is the largest producer of LCD screens and second largest producer of household appliances in Europe. The electronics industry, comprising of the world’s leading brands that took advantage of the favourable investment condition, is highly innovative and produces the most advanced products available on the market.

When looking at Poland with a business opportunity in mind, one cannot forget about the steadily increasing role of service centres. The sector of business process off-shoring, especially when accounting, financial and IT services or research and development are concerned, is one of the fastest growing in Poland. The big push for shared services centres came 5 years ago and so far there is no sign of slowing demand for further growth. On the contrary, companies that invested in previous years are expanding and moving even more complex operations to Poland. Even though the price of labour is growing and in the future it will approach the average for the EU, the quality of the workforce, its educational aspirations and high standards of work ethics more than compensate for that. And besides, the level of wages has still some way to go before it reaches the EU average.

The other two sectors that many foreign companies concentrate their interest on are aviation as well as machinery and steel. In both cases, the recent crisis had a negative influence on the growth in these two sectors, however, the first signs of faster growth are detectable.

As for Polish - British trade relations, these gained momentum with the Polish accession to the European Union. Significant migration of Polish nationals to the UK, estimated in proximity to 1 million at its peak level, played an important role in creating and tightening of the commercial bonds between the two countries. According to the estimate of the Centre for Economics and Business Research the spending power of Polish nationals in the UK is somewhere between £3.5 and £4 billion, an equivalent of consumer demand of Liverpool added to the British economy. On the reverse side, since 2007 onwards, British nationals have been the second biggest group of visitors to Poland according to the tourism studies carried out by the National Statistical Office.

Over recent years, bilateral trade between Poland and the UK has registered a regular annual growth of around 20%. Even in 2009 in the peak of the crisis, trade turnover between the two countries grew. Recent statistics have it that imports form Poland just overtook the level of imports registered from India. According to HM Revenue and Customs, various products such as medicines, groceries, furniture and machinery in the last few years have registered a surge in trade between the two countries. A considerable growth in Polish exports was also registered in the electric and electronic equipment sector. In fact, Polish exports to the UK in that area recorded a threefold increase over recent years. Grocery products and car exports have also gone up significantly. It is estimated that the traded value of this category of products should register a strong increase in the coming years. Further, Polish furniture, traditionally a significant element of Polish export to the UK, remains in high demand.

Going the other way are British exports, most of them highly manufactured goods. It is worth noting that both imports and exports between the two markets reacted with a continuous adaptation to the changing dynamics of exchange rate and global environment.

Recently, the renewed drive to privatise state-held assets increased the attention paid to Poland by foreign investors. Just a few months ago, the biggest initial public offering to date on the Polish market and the biggest in Europe since 2007 took place on Warsaw Stock Exchange. The IPO of PZU was worth $2.7 billion and although the biggest it will not be the only one of comparable size in 2010 and 2011. Other state assets await their time.


For more informationon on Poland, macroeconomic indicators or business and investment opportunities, please contact:
t: 020 7317 27 00
w: www.london.trade.gov.pl
e: london@trade.gov.pl

Trade and Investment Promotion Section
Embassy for the Republic of Poland
90 Gloucester Place
London
W1U 6HS

Sources: PAIIZ, GUS, Polish Market



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