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Emerging Markets Growth Prospects: Poland

  • May 2014
  • -
  • Frost & Sullivan
  • -
  • 66 pages

Insight into Emerging Markets

Poland has successfully averted the 2008 European crisis and registered steady growth owing to its prudent fiscal balance. A highly-skilled workforce, transparent banking regulations, and tariff-free access to the European market make it one of the most attractive nations globally for foreign investment. Resilient domestic demand and gradual rebound in exports are expected to support strong GDP growth in the medium term. Furthermore, large-scale investment plans for R&D and infrastructure improvement would support industrial growth in Poland during 2014–2018.

Executive Summary
The Civic Platform Party of Poland won the 2011 elections. The party is expected to work
toward rebuilding public trust before the 2015 elections, given that it has been largely
criticized for its labor policy reforms in 2013.
- The government is expected to make significant efforts to accelerate spending on
infrastructure developments and modernizing the economy 2014 onwards.
- Through its participation in various European treaties, Poland shares a strong political
and economic relationship with Western and Eastern Europe. Also, its accession to the
European Union (EU) and the Organisation for Economic Co-operation and Development
(OECD) allows it free trade with member economies.
- Germany, France, the United Kingdom, and Italy are Poland’s major trade partners.
Relations with Russia, its main import partner, have improved significantly in the past
years.
- The Polish economy is largely dependent on energy exports. The United States, the
United Arab Emirates, and China are Poland’s key trade partners outside Europe; healthy
trade relations with these economies helped Poland sustain positive GDP growth when
demand from the rest of Europe faltered between 2009 and 2013.
- Growth in 2012 declined on account of two factors—decline in investment and slow
recovery in external demand. To revive consumption growth, lending rates have been
reduced to a record low in 2013 and are expected to remain low until 2014.
- Current account surplus was recorded in 2012 owing to a significant decline in imports
despite slow growth in export demand. Trade is likely to accelerate in 2014 as the global
scenario improves.
The Civic Platform Party of Poland won the 2011 elections. The party is expected to work
toward rebuilding public trust before the 2015 elections, given that it has been largely
criticized for its labor policy reforms in 2013.
- The government is expected to make significant efforts to accelerate spending on
infrastructure developments and modernizing the economy 2014 onwards.
- Through its participation in various European treaties, Poland shares a strong political
and economic relationship with Western and Eastern Europe. Also, its accession to the
European Union (EU) and the Organisation for Economic Co-operation and Development
(OECD) allows it free trade with member economies.
- Germany, France, the United Kingdom, and Italy are Poland’s major trade partners.
Relations with Russia, its main import partner, have improved significantly in the past
years.
- The Polish economy is largely dependent on energy exports. The United States, the
United Arab Emirates, and China are Poland’s key trade partners outside Europe; healthy
trade relations with these economies helped Poland sustain positive GDP growth when
demand from the rest of Europe faltered between 2009 and 2013.
- Growth in 2012 declined on account of two factors—decline in investment and slow
recovery in external demand. To revive consumption growth, lending rates have been
reduced to a record low in 2013 and are expected to remain low until 2014.
- Current account surplus was recorded in 2012 owing to a significant decline in imports
despite slow growth in export demand. Trade is likely to accelerate in 2014 as the global
scenario improves.
- Poland is renowned for automotive production, especially sophisticated passenger cars
and lightweight vehicles. Manufacturers such as Fiat, Ford, Opel, Toyota, and
Volkswagen have their manufacturing units in Poland, given its strong network of
suppliers and sub-suppliers.
- The remuneration in the automotive sector is higher than the industry average, and thus
attracts highly skilled, young population. Moreover, the sector is crucial for the
development of Poland’s backward regions.
- Growth in automotive exports, which accounts for about % of total exports, has
remained lackluster since 2008 owing to the slowdown in European demand. A gradual
recovery is expected in the next 5 years.
Manufacturing
- Poland specializes in manufacturing products that require high technology and
specialization—such as electronics, cars, shipbuilding, medical devices, and food
processing.
- Low domestic demand and deteriorating business sentiments kept manufacturing output
as well as manufacturing import growth subdued in 2012.
- Gradual increase in new orders, followed by a rise in input demand and high employment
generation in mid-2013 indicates a quick recovery likely for the manufacturing sector.
Chemicals
- Chemicals is the largest sector of Poland in terms of revenue generation.
- This industry provides stable growth opportunities. The increasing efficiency and
profitability of the sector follows its privatization and modernization since 2011.
- The main challenge for the sector is the rising input prices. Effective cost restructuring is
likely to increase profitability in the long run.
- Poland depends on imports of most mineral commodities for domestic consumption.
Depreciation of the Zloty against the US dollar in 2013 has kept commodity prices high,
and domestic demand subdued in 2013.
- Following an increase in taxes on metal production in 2012, and difficulty obtaining
carbon-dioxide emission permits, the mining industry is likely to grow only marginally in
the next years.
- Due to a lack of petroleum and natural gas reserves in Poland, coal and lignite are the
main sources of electricity generation.
- Huge investments are planned between 2014 and 2020, to develop Poland’s energy
infrastructure, including renewables.
- Poland could have vast shale gas reserves in the basins of the Baltics, the Lublin, and
the Podlasie. Exploration of shale gas may reduce Poland’s dependence on Russia to
meet its domestic gas requirements.
- It is also expected to start construction of its first nuclear power plant in 2016.
- Poland has a well-developed and maturing telecom industry. Hence, robust growth in the
industry is unlikely in the forecast period.
- The growing popularity of its IT services is expected to attract significant FDI in 2014.
- The healthcare industry here is in an early stage of development, with much untapped
growth potential. Gradual emergence of the private healthcare sector is expected to help
develop the industry through increased medical facilities.
- The pharmaceutical industry is likely to register strong growth in the next years through
research and innovation, along with active government support.

Table Of Contents

Emerging Markets Growth Prospects: Poland
Contents

Executive Summary 4

Political Overview 9

Economic Overview 14

Social Overview 23

Legal Overview 26
- Automotive Industry 29
- Manufacturing Industry 33
- Chemical Industry 36
- Mining Industry 39
- Energy Industry 42
- Information and Communications Technology (ICT) Industry 47
- Healthcare Industry 51

Key Takeaways 55

The Frost and Sullivan Story 59

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