When you consider doing business in other countries, Poland may not be one that immediately comes to mind. It may be out of the way geographically, but what’s it like doing business in Poland? To figure out of doing business in Poland is beneficial, there’s some helpful background information about the Poland economy facts that should be known.
What you need to know about the economy to do business in Poland
The Polish economy has come a long way since the fall of the Iron Curtain. By shifting to a Capitalist free market, Poland has made tremendous strides in building its economy and could arguably called one of the biggest success stories of the Communist collapse. Since the end of the communist period, Poland has achieved a “very high” ranking in terms of human development and standard of living. The Polish economy has gone from third world status to one of the most developed economies on the planet in period of just two decades, with a GDP of $468.539 billion, as measured by the IMF.
As a result, Poland is considered a high-income economy by the World Bank, and is considered to be one of the healthiest of the post-Communist countries and is currently one of the fastest growing within the EU. Having a strong domestic market, low private debt, flexible currency, and not being dependent on a single export sector, Poland is the only European economy to have avoided the late-2000s recession, according to CNN. Since the fall of the communist government, Poland has steadfastly pursued a policy of liberalizing the economy and today stands out as a successful example of the transition from a centrally planned economy to a primarily market-based economy. In 2009 Poland had the highest GDP growth in the EU. The privatization of small and medium state-owned companies and a liberal law on establishing new firms have allowed the development of an aggressive private sector. The Polish banking sector is the largest in central and eastern Europe as well being as the largest and the most highly developed sector of the country’s financial markets. Poland has a large number of private farms in its agricultural sector, with the potential to become a leading producer of food in the European Union. Warsaw leads Central Europe in foreign investment, according to The Warsaw Voice, which is one of Poland’s major newspapers. GDP growth had been strong and steady from 1993 to 2000 with only a short slowdown from 2001 to 2002. Poland is recognised as a regional economic power within Central Europe, possessing nearly 40 percent of the 500 biggest companies in the region, according to the Warsaw Business Journal.
Poland is recognised as having an economy with significant development potential, overtaking the Netherlands in mid-2010 to become Europe’s sixth largest economy, according to giannebrownell.com. Foreign Direct Investment in Poland has remained strong ever since the country’s re-democratisation following the Round Table Agreement in 1989. According to a Credit Suisse report, Poles are the second wealthiest (after Czechs) of the Central European peoples, meaning that the Polish market holds a good level of promise to sell into, with the Polish population having one the highest birth rates in Europe. The Polish population was measured at 38,231,000, according to census by the Polish government. In recent years, Poland’s population has decreased because of an increase in emigration and a sharp drop in the birth rate. Since Poland’s accession to the European Union, a significant number of Poles have emigrated to Western European countries such as the United Kingdom, Germany and Ireland in search of work. However, this trend is contrasted by a recent data that shows that more Poles are entering the country than leaving it. The Times has established that, for the first time since they began arriving en masse four years ago, more UK-based Poles are returning to their homeland than are entering Britain.
Although the Polish economy is currently undergoing economic development, there are many challenges ahead. In addition, the ability to establish and conduct business easily has been cause for economic hardship as the World Economic Forum recently ranked Poland near the bottom of OECD countries in terms of the clarity, efficiency and neutrality of its legal framework for firm to settle disputes. A report by CEIS (Council of European Investment Security) concluded that on-going foreign business disputes issues may “have damaged Poland’s reputation as an attractive location for FDI” by reinforcing the impression of “Poland’s substandard reputation for maintaining an efficient and neutral framework to settle business disputes involving multinational foreign investors.” Ernst & Young’s 2010 European attractiveness survey reported that Poland saw a 52% decrease in FDI job creation and a 42% decrease in number of FDI projects since 2008. Other problems also exist, and further progress in achieving success depends largely on the government’s privatisation of Poland’s remaining state industries and continuing development and modernisation of the economy.
Overall, the Polish economy has a tremendous amount of potential for the future. One of its biggest assets is that it is not a part of the Eurozone, even though officially it is in the process of acceding to the Euro around 2016. However, the recent crises have largely thrown those plan on the back burner for the Polish government. The Polish economy still continues to have good growth rates even after it has achieved developed economy status, with a estimated growth rate of 3.8% in 2010. A large chunk of the Polish economy is based on services, as is the condition with developed economies. The estimated GDP share per sector for 2009 can be broken down as Agriculture: 4.6%; Industry: 28.1%; Services: 67.3%. The Polish market is probably more of a market to sell into than manufacture from, since Polish wages are currently going through major increases and it is likely this trend will continue for at least a little while into the future. This is a high-growth market for any businesses who are considering on expanding into this country.