Doing well but could do better, says new report on Poland’s economy
With low unemployment and strong economic growth, the Polish economy is in good shape, but there is room for improvements in some areas, according to a new report.
The report released by the Polish Union of Entrepreneurs and Employers (ZPP) this week entitled “Investments in Poland: opportunities and threats” looks at what the country needs to do to maintain growth in the years ahead.
Bringing together over 50,000 companies with more than 570,000 employees in total, ZPP’s aims include improving business conditions, representing its members and providing them with opportunities for growth and cooperation.
Despite its good economic results, one area that Poland needs to work on is investment, the report argues.
“The rate of investment is key for long-term economic growth,” said ZPP’s chairman Cezary Kaźmierczak, introducing the report’s findings ahead of its launch in Warsaw on 24 January.
Investment in Poland as a share of GDP is relatively low compared to other EU countries, the report shows. In 2017, gross spending on investment in Poland in relation to GDP was 88.1% of the EU average – lower than in other countries in Central and Eastern Europe. The Czech Republic came first with 122.9%, followed by 117.9% in Estonia and 112.4% in Romania, according to Eurostat data cited in the report.
The situation has improved somewhat: investment in Poland picked up last year, especially in the third quarter, boosting GDP growth. Still, the surge in investment is mainly comes from the public sector, while growing much more slowly at private companies.
Moreover, 71% of Polish investments are made by big companies, compared to just 7.5% by small ones, the report adds.
“We observe that although the overwhelming majority of companies in Poland belong to it, the SME sector is responsible for just 28.5% of spending on fixed assets. Investment barriers are much more severe for these entrepreneurs than for large companies,” said Katarzyna Włodarczyk-Niemyjska, director of ZPP’s legal and legislative department.
According to ZPP’s research, Polish companies tend to share a handful of main concerns, which may be discouraging them from investing. These include an uncertain legal environment, rising labour costs, a shortage of workers and expensive building materials, among others.
In this context, the report closes with recommendations, such as restoring confidence in financial markets and supporting companies looking for capital for development and investments. More broadly, Poland will need a migration strategy to help tackle its labour shortage, ZPP suggests.