Download ECONOMY OF POLAND

ECONOMY OF POLAND
BASIC INFORMATION
CURRENCY: 1 zloty = 100 groszy
GDP per capita: $18,072
GDP growth in 2009: 1.8%
Inflation rate: 3.9%
Unemployment rate: 9.4%
Ease of Doing Business Rank: 70th
EVOLUTION OF POLISH
ECONOMY
After the end of the World War II Poland was under
Soviet Communist dominance. Since 1952 the
official name of Poland was People’s Republic of
Poland. At that time Polish economic system was
based on centrally-planned economic model
and nationalized companies. The government was
significantly involved in shaping Polish market. It
turned out quite soon that this kind of economic
model couldn’t work well. There was a lack of basic
products and jokes about vinegar being the only
thing avaliable on shop shelves became very
popular among the society.
In 1989, after Polish Round Table Agreement, Poland
had to face economical changes. The effects of multiyear absolute communist rule were hard to imagine:
rising inflation, enormously huge debt, poverty among
the society. A method of rapid transition from a
communist economy, based on state ownership
and central planning, to a capitalist market economy,
appeared to be the Balcerowicz Plan, also termed
Shock Therapy. It was a packet of 11 acts, which
included many solutions to the difficult economic
situation in Poland. The Balcerowicz Plan became the
begining of Polish dream about prosperity.
Now, Polish economy is officially considered free
market-based, but it certainly isn’t true. There are still
many problems we have to struggle with, such as
government involvment in the market, privatisation
and social welfare. In fact, we are in the middle of the
way between socialism and capitalism.
POLISH ECONOMY TODAY
Poland's high-income economy is the 6th largest in
the EU and one of the fastest growing economies
in Central Europe, with an annual growth rate of
over 6.0% before the late-2000s recession. It is the
only member country of the European Union
to have avoided a decline in GDP, which means
that in 2009 Poland obtained the biggest GDP
growth in the EU. As of December 2009, the Polish
economy had not entered recession nor
contracted, while its IMF 2010 GDP growth forecast
of 1.9 per cent is expected to be upgraded.
However, the economic activity of its workforce is
59%, one of the lowest in the European Union.
With the collapse of the rublebased COMECON trading bloc in 1991, Poland
scrambled to reorient its trade. As early as 1996, 70% of
its trade was with the EU members, and today
neighbouring Germany is Poland's dominant trading
partner. Poland joined the EU in May 2004.
Before that, it fostered regional integration and trade
through the Central European Free Trade
Agreement(CEFTA), which included Hungary,
the Czech Republic, Slovakia and Slovenia.
Most of Poland's imports are capital goods needed
for industrial retooling and for manufacturing inputs,
rather than imports for consumption. Therefore, a
deficit is expected and should even be regarded as
positive at this point. Poland is a founding member of
the World Trade Organization and a member
of the European Union. It applies the EU's common
external tariff to goods from other countries (including
the U.S.). Most Polish exports to the U.S. receive tariff
benefits under the Generalized System of
Preferences (GSP) program.
Opportunities for trade and investment continue to exist
across virtually all sectors. The American Chamber of
Commerce in Poland, founded in 1991 with seven
members, now has more than 300 members. Strong
economic growth potential, a large domestic market,
EU membership, and a high level of political stability are
the top reasons U.S. and other foreign companies do
business in Poland.
FOREIGN BUSINESS IN POLAND
Polish law is rather favourable to foreign
entrepreneurs. The government offers investors
various forms of state aid, such as: CIT tax at the
level of 19% and investment incentives in 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 the National
Bank of Poland (NBP) the level of FDI inflow into
Poland in 2006 amounted to 13.9 billion Euro.
One of the main reasons why investors tend to choose
Poland is its location at the very heart of continental
Europe, part of the trans European road network and
easy access to 250 million consumers within a radius of
1,000 kilometers. Poland is a significant market
of 38 million consumers driving 10% annual retail market
growth. In the first quarter of 2007, the Polish economy
recorded GDP growth of 7%, which is twice as much as
the EU average.
According to an Ernst & Young report, Poland
ranks 7th in the World in terms of investment
attractiveness. According to the OECD
(www.oecd.org) report, in 2004 Poles were one of
the hardest working nations in Europe. It is
estimated that the selection of Poland as the coorganizer of the European Football Championships
in 2012 will speed up a lot of investments in Poland
in the coming years. It will mainly be investment in
sectors such as roads, railways and air
infrastructure, as well as in the hotel, tourism,
gastronomy and recreation industries.
Polish Information and Foreign Investment Agency
offers support for foreign investors - assists and
helps investors in all the necessary legal and
administrative procedures.
A FEW FACTS
Public debt: 47.5% of GDP
Revenues: $83.68 billion
Expenses: $93.47 billion
Foreign reserves: $67.29 billion
Exports: $136.7 billion
Imports: $149.6 billion
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