An overview of Poland

Poland’s place in the world economy

Poland represents a major power in terms of its territorial, population and economic potential. There has been an upward trend in its importance as a European and global player in both economy and politics. Since 1989, Poland’s GDP in dollars has increased five-fold. Poland is a major producer and exporter of both raw and processed materials. It is one of the top ten producers of refined copper, sulphur, bituminous coal and lignite. It is among the top twenty producers of sulphuric acid, steel and electric power. Agriculture plays a major part in Poland’s economy and the produce of Poland constitutes a large share in the domestic market. Poland is the world leader in production of rye having roughly the ¼ in the global market. It is also one of the major suppliers of oat, potatoes, sugar beet and swine. In 2005, Poland was listed among the world’s top 30 exporters taking the 21st place with 0.9% share of the global export. The improvement of the position of Poland on the global market is attributed to a high turnover and foreign trade dynamics which is higher than the worldwide average. Between 1990 and 2005, the mean rate of Polish export volume growth exceeded 10% per year and the import volume rate was at 15% annually with the worldwide annual volume estimated at about 6%. Such a high rate is partially attributed to a large number of Polish companies with foreign capital. Poland retains its position as one of the main beneficiaries of direct foreign investments in Central and Eastern Europe and holds the leading spot in terms of a total value of the acquired investments.

Poland’s rapid development

Since the political transformation of 1989, Poland has been a rapidly growing economy, making its presence felt more and more on the international scene. Poland has become a major international player with rapidly increasing GDP and the value of industrial production and export. Before the global economic crisis, its economic growth rate was at 6%. Poland achieved an economic growth rate of 3.9 % after the crisis, which was one of the best results in Europe. Its relatively low inflation rate has made Poland an attractive place for foreign investors who are more and more willing to open here their factories, making Poland a springboard for marketing their products and services in the region and beyond. It is worth noting that Poland has gone through the recent economic crisis relatively unscathed. It has been able to retain the positive economic growth as well as a steady increase in industrial production, while experiencing only a slight decrease in employment. International companies are very much interested in investing in Poland. Many Polish native companies have taken an opportunity to make use of the European structural and investment funds to further their prospects of comprehensive development. There is still plenty of room for telecom and IT companies, as Polish society is becoming more and more digitised with a great number of new telecom services subscribers each year. Poland boasts one of the largest market penetration rates of mobile Internet access in Europe, while there are still many prospective subscribers who intend to use the mobile Internet access in the foreseeable future. On the other hand, the landline system of broadband Internet in Poland is still somewhat lagging behind the European standards with some of the regions of Poland, especially those predominantly rural ones, either in need of a better infrastructure and short of fibre optic cables facilitating broadband connection, or entirely cut off from the World Wide Web. However, Poland has recently made a huge step forward in bringing many of those regions up to standard with intensive efforts to create new or to upgrade the existing infrastructure. The situation creates a number of opportunities for the telecom and IT companies to invest in and to make profit of the still relatively unsaturated market.

Poland’s economy as seen from abroad

Rapid rate of economic growth contributes to Poland’s image as an economically and politically stable nation of success, enjoying great prospects for the future. It is reflected in the way Poland is evaluated by independent financial institutions and influential organisations. Poland’s location in central Europe is perceived as a great economic asset. Another key feature of Poland, often highlighted by international media and institutions, is its high crisis-resistance, proven during the last world economic crisis. Polish law system is also favourable to foreign entrepreneurs who are offered substantial state aid by the Polish government. This includes CIT tax at the level of 19% and investment incentives in the 14 Special Economic Zones (among others: income tax exemption, real estate tax exemption, competitive land prices), several industrial and technology parks, the possibility to benefit from the EU structural funds, brownfield and greenfield locations. According to an Ernst & Young report, Poland ranks 7th in the World in terms of investment attractiveness. According to the National Bank of Poland (NBP), the level of foreign direct investment inflow into Poland in 2006 amounted to € 13.9 billion. The characteristics of the Polish economy encourage foreign investors to venture into the Polish market. These include a vast and receptive domestic market, auspicious prospects of industrial development, competitive conditions for running a business, such as relatively low labour costs, numerous, highly qualified and well educated personnel, as well as the location of Poland facilitating logistics and the development of cooperation with the Eastern markets, including Russian, Ukraine and other and other members of the Commonwealth of Independent States.

Natural resources

Poland is reach in natural resources. It is among world’s top producers of bituminous coal, sulphur, copper and silver. Poland also has considerable resources of zinc, lead, natural gas, salt and other minerals. In recent years, there has been a major research program carried out for the search of shale gas which is thought to be in abundance within the Polish territory. Coal is the main fossil fuel used in Poland as a source of energy. Poland is Europe’s largest producer and exporter of bituminous coal (excluding Russia) as well as a major producer of lignite. The resources of bituminous coal are estimated at 43.3 billion tons. Silesia is the major centre for mining in Poland, while the Bogdanka Coal Mine in Łęczna, Lublin Voivodeship is another major site of coal mining. The resources of lignite are estimated at 13.7 billion tons. Such robust coal resources greatly increase Poland’s energetic self-efficiency. Natural gas resources in Poland are estimated at 121 billion m3 with its extraction covering 35% of natural gas demand. Russia is the largest supplier of gas to Poland, covering roughly a half of the national demand. Poland is currently trying to diversify its gas import sources in an effort to improve its level of energetic security.