• Faithful to my Homeland, the Republic of Poland


    The Polish economic success story


    Poland, with a population of over 38 million inhabitants, is the largest member of the European Union among all the countries of Central and Eastern Europe. In terms of GDP, Poland is the 7th biggest economy in the EU and the 20th biggest economy in the world.

    A positive phenomenon observed in the years has been a continuous increase of Poles’ educational attainment level. The percentage of Poles with education at the secondary or higher level increased from 41.4% in 2002 to 48.6% in 2011. The most rapid growth was recorded in the group of people with higher education, whose share in population aged 13+ increased from 9.9% in 2002 to over 17.0% in 2011.

    Poland’s gross domestic product (GDP) increased by 3.5% in Q1 2012, according to estimates by GUS. At the same time, investments increased by an estimated 6.7%, while domestic demand gained 2.7%. These data already indicate a slowdown of the economic growth, compared with 2011, when GDP grew by 4.3% with investments increasing by 8.1% and domestic demand – by 3.6%.

    The GUS and Eurostat data indicate that in terms of 2011 GDP growth rate Poland ranked fourth among 27 EU member states, falling behind the three Baltic States.

    In the light of the newest forecasts by the European Commission, Polish GDP growth is to amount to 2.7% y/y in 2012 and will be the highest amongst all the EU member states. In 2013, the EC estimates, Polish GDP may increase by 2.6%.


    Over the recent years, observers have grown accustomed to the Polish economy’s relatively good performance against the backdrop of the region of Central and Eastern Europe as well as the entire European Union. It was particularly visible in 2009, when Polish GDP, according to Eurostat data, grew 1.6%, making Poland the only EU country with a positive economic growth and earning the country the name of the “green island”. It was also in 2010 that Polish economy stood out among European peers: the GDP growth of 3.9% was the third highest in the EU, behind Slovakia’s and Sweden’s.

    Growing faster than its environment, Poland is catching up, in terms of economic situation, with Western EU countries. Poland’s GDP per capita in 1995 was 43% of the average of EU countries, in 2000 it was 48%, and in 201063%.


    From Poland’s accession to the European Union until the Polish presidency of the European Union Council in the second half of 2011, the country has come a long way. A strong support in this process has and continues to be provided by the inflow of structural funds granted in the framework of the EU’s cohesion policy. In the EU’s 2007-2013 budget, the subsidies for Poland amounted to nearly EUR 68 bln, the highest sum among the EU funding beneficiaries.

    According to the Regional Development Ministry’s data since the launching of EU subsidies programs of the 2007-2013 framework, authorities and beneficiaries signed 72,696 contracts for the total sum of PLN 310.9 bln of qualified expenses, including co-funding on the part of the EU amounting to PLN 213.4 bln, which constitutes 74.9 percent of the allocation for the 2007-2013 period.

    The inflow of EU funds may still increase in the years 2014-2020. The draft regulations concerning the new cohesion policy after 2013 approved by the European Commission on October 5, 2011, presume allocating EUR 336 bln to the cohesion policy in the next six-year budget of the EU and capping individual member states’ absorption of structural funds at 2.5% of their respective GDPs, which in the case of Poland could translate into an inflow of EU subsidies worth some EUR 80 bln in 2014-2020.

    Strong internal demand and solid private consumption are often named by economists as strengths of the Polish economy, contributing to the country’s retaining its economic growth even in the face of difficult conditions on international markets. Indeed, the first half of 2012 has shown that those indicators, even though at levels lower than last year, still constitute a support for the GDP growth.

    According to GUS’ Information on socio-economic situation of the country in H1 2012, published on July 25, 2012, in the first six months of the year Poland’s retail sales (in constant prices) grew by 5.3% y/y. Retail sales’ growth rate significantly decreased in Q2, when it amounted to 2.7% y/y compared with 8.4% recorded in Q1, GUS data show.

    Poland’s rate of unemployment in June 2012, calculated according to Eurostat’s methodology and seasonally adjusted, amounted to 10.0%, having grown by 0.1 pp m/m. staying flat for the third month in a row. The stabilization of the unemployment rate in H1 2012 (in the January-May period, it stayed flat at 9.9%) followed a period of unemployment rate increase observed last year. The June unemployment figure in Poland is slightly lower than the average for the entire EU (10.4%) and considerably lower than the average figure for the euro zone (11.2%).

    Inflow of foreign direct investments (FDI) to Poland amounted to EUR 10,904 mln in 2011 and was nearly 63% higher y/y, according to data by the National Bank of Poland (NBP). According to UNCTAD data quoted by the Polish Information and Foreign Investment Agency (PAIiIZ), in turn, 2011 FDI inflow to Poland increased by as many as 65% y/y to USD 15.1 bln. The value of FDI inflow to Poland in 2011 was nearly three times higher than the respective value recorded by the Czech Republic, the second country amongst 10 new EU member states in UNCTAD’s ranking.

    The turn of 2011 and 2012 brought weaker readings of foreign direct investments inflow to Poland: in January, February and April the net FDI was negative, whereas FDI inflow was observed only in March and May, according to NBP’s current account estimates. And still, in the view of Ilona Antoniszyn-Klik, deputy secretary of state in the Economy Ministry, Poland stands big chances of seeing its 2012 FDI inflows exceed EUR 10 bln. “We are seeing a very high level of interest in Poland on the part of foreign investors. This year might turn out to be a breakthrough in terms of the perception of Poland against the backdrop of other countries in the region – it seems that Poland is already beginning to get out of the basket,” Antoniszyn-Klik told PAP on June 18.

    Earlier FDI data indicate that Poland have so far stood out in terms of foreign direct investments (FDI) among its CEE peers. According to UNCTAD data, foreign direct investments inflow to Poland between 2005 and 2010 totaled at some USD 91.7 bln (compared to Lithuania’s FDI of some USD 7.6 bln, Latvia – some USD 6.4 bln, the Czech Republic – some USD 37.7 bln, Bulgaria – some USD 39.5 bln and Hungary – some USD 30.3 bln in the same period) In 2010 the inflow of foreign direct investments to Poland was nearly USD 9.7 bln, which ranked the country first in the region.


    Foreign trade – exports continue to grow faster than imports

    According to GUS’ preliminary data, in 2011 exports grew faster than imports. PLN-denominated exports in current prices were higher by 15.3% compared with 2010 and amounted to PLN 554.8 bln. Imports, in turn, increased y/y by 14.6%, hitting the level of PLN 614.4 bln. Thus, the foreign trade exchange ended the year with a deficit of PLN 59.6 bln, compared with a deficit of PLN 55.1 bln in 2010.

    Table 6 Poland’s foreign trade volumes

    source: GUS

    The exports growth rate remains at higher levels than the one of imports in 2012 too: the PLN-denominated value of exports, in current prices, increased by 9.9% in the January-May period, while the corresponding growth rate of imports was 7.7%.

    Table 7 Foreign direct investments (FDI) inflow to Poland

    source: NBP

    The geographical structure of Poland’s foreign trade slightly shifted in the course of the five first months of 2012: the share of developed countries (including the EU countries) in Poland’s total foreign trade turnover decreased y/y, while the significance of all the other groups of countries increased compared with the same period in 2011. The shift might be seen as a sign that in the face of the economic slowdown in the Western European countries, Polish companies are searching for trade partners on other, more prospective markets.

    In the first five months of 2012 Germany has retained its position of the leading recipient of Polish exports. Poland’s western neighbor absorbed 25.6% of Poland exports in the January-May period and was responsible for 21.3% of imports to Poland in the period. Germany’s share in both of the categories has slightly decreased compared with the same period of the year prior – by 0.6 pp and 0.8 pp respectively.


    Polish capital market – Warsaw as financial hub of CEE region

    The Warsaw Stock Exchange continues to confirm and strengthen its position as the financial hub of the Central and Eastern Europe. With 58 initial public offerings (IPOs) conducted in H1 (9 of them on the main market, the remaining 49 on the alternative market NewConnect), the WSE managed to retain its position as Europe’s leader in terms of the number of IPOs, according to PwC’s new report IPO Watch Europe Q1 and Q2 2012. In terms of the pooled worth of H1 2012 IPOs, the WSE with the result of EUR 64 mln ranked fourth in Europe, behind LSE, NYSE Euronext and SIX Swiss). The WSE’s rank in this respect came down by one notch compared with FY 2011, when EUR 2.2 bln of the WSE’s IPOs ranked the Warsaw bourse just behind the London and Madrid stock exchanges.

    It is worth noting at this point that H1 2012 brought a significant lowering of primary market activity on both the Polish and the majority of global markets compared with the analogous period last year. Between January and June last year, the WSE conducted as many as 100 debuts jointly worth EUR 721 bln.

    2011 indeed was the time of intensive development of the WSE. In terms of the y/y increase of the number of listed companies, which amounted to 33% in the case of the WSE, the Polish stock market ranked first in the world, outperforming even China’s Shenzhen Stock Exchange, which enjoyed a 21% y/y growth (World Federation of Exchanges’ (WFE) data). When it comes to equity turnover growth in 2011, standing at 25% for the WSE, according to WFE data, the Warsaw exchange was the fifth best stock market in the world and the leader in Europe.

    The WSE may also pride itself on its derivative instruments market, being an important one on the European arena, as well as on its fast-growing non-Treasury bond market Catalyst, run by Bondspot SA, a firm of the WSE’s capital group. In terms of trade volume of index futures, the WSE, with the result of 13.7 mln units in 2011, ranked first in the region of Central and Eastern Europe and fourth in Europe, according to data from stock exchange operators and the Federation of European Stock Exchanges (FESE). The Warsaw equity market retains the position in H1 2012, with the index futures trade volume exceeding 5.06 mln units. The Catalyst market, in turn, saw its turnover in March and in the entire Q1 reach record-high levels. “Monthly turnover in March amounted to PLN 380.5 mln and was nearly four times higher than in the same period last year, while the turnover in the entire Q1 2012 amounted to PLN 580.0 mln (a y/y increase of 97.3%),” the WSE said in a statement. In Q2 2012 the Catalyst market turnover volume was already lower: at PLN 218.8 mln it was down 23.8% y/y.

    The WSE’s significance as a financial center goes beyond the European continent – the list of institutions present in Warsaw features many global players, including Goldman Sachs, Morgan Stanley, Merrill Lynch, JP Morgan, Credit Suisse, Societe Generale, UBS, BNP Paribas and HSBC, all of which have the status of the WSE’s member.



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