38500000
Polish (official) 98.2%, Silesian 1.4%, other 1.1%, unspecified 1.3%
WARSAW (capital) 1.722 million; Krakow 760,000 (2015)
- Conventional long form
- Republic of Poland
- Conventional short form
- Poland
- Local long form
- Rzeczpospolita Polska
- Local short form
- Polska
parliamentary republic
- Name
- Warsaw
- Geographic coordinates
- 52 15 N, 21 00 E
- Time difference
- UTC+1 (6 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in March; ends last Sunday in October
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Poland has the sixth-largest economy in the EU and has long had a reputation as a business-friendly country with largely sound macroeconomic policies. Since 1990, Poland has pursued a policy of economic liberalization. During the 2008-09 economic slowdown Poland was the only EU country to avoid a recession, in part because of the government’s loose fiscal policy combined with a commitment to rein in spending in the medium-term. However, since 2015 Warsaw’s prioritization of spending on social welfare programs has prompted investors to decrease Poland’s economic growth projections for the next few years.
- Inflation
- -0.61%
- Total tax rate (% of commercial profits)
- 40.4%
- Real Interest Rate
- 3.318%
- Manufacturing, value added (% of GDP)
- 20.436%
- Current Account Balance
- US$ -1,395,000,000
- Labor Force, Total
- 18,348,915
- Employment in Agriculture
- 11.50%
- Employment in Industry
- 30.44%
- Employment in Services
- 57.75%
- Unemployment Rate
- 6.18%
- Imports of goods and services
- US$ 227,220,956,431
- Exports of goods and services
- US$ 245,468,471,934
- Total Merchandise Trade
- 85.16%
- FDI, net inflows
- US$ 14,185,000,000
- Commercial Service Exports
- US$ 48,976,000,000
potatoes, fruits, vegetables, wheat; poultry, eggs, pork, dairy
machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages, textiles
- Commodities
- machinery and transport equipment 37.8%, intermediate manufactured goods 23.7%, miscellaneous manufactured goods 17.1%, food and live animals 7.6% (2012 est.)
- Partners
- Germany 27.1%, UK 6.8%, Czech Republic 6.6%, France 5.5%, Italy 4.8%, Netherlands 4.4% (2015)
- Commodities
- machinery and transport equipment 38%, intermediate manufactured goods 21%, chemicals 15%, minerals, fuels, lubricants, and related materials 9% (2011 est.)
- Partners
- Germany 27.6%, China 7.5%, Russia 7.2%, Netherlands 5.9%, Italy 5.2%, France 4.1% (2015)
- Country Risk Rating
- A3
- Changes in generally good but somewhat volatile political and economic environment can affect corporate payment behavior. A basically secure business environment can nonetheless give rise to occasional difficulties for companies. Corporate default probability is quite acceptable on average.
- Business Climate Rating
- A2
- The business environment is good. When available, corporate financial information is reliable. Debt collection is reasonably efficient. Institutions generally perform efficiently. Intercompany transactions usually run smoothly in the relatively stable environment rated A2.
- Market of 38 million inhabitants
- Proximity to West European markets
- Price competitiveness and qualified and inexpensive labor
- Integrated into the German production chain
- Primary beneficiary of European structural funds
- Diversified economy (agriculture, various industries and services)
- Resilient financial sector
- Coal resources
- Insufficient investment/insufficient domestic savings
- Low levels of research and development
- Development in the eastern regions lagging behind
- Rigid labor market favoring the shadow economy estimated at 23%
- High level of structural unemployment and low employment rate for women
- Lack of competition
- Low birth rate
Growth is expected to increase slightly in 2017, but without quite returning to its 2015 level. Household consumption will remain the principal driving force. Household incomes will continue to rise thanks to strong employment and the benefits created in April 2016 aimed at modest families with at least two children (PLN 500 per child and per month). Public Investment, reduced in 2016 during the transition between two European funding programmes, should pick up. House building should benefit from a government imitative aimed at supporting renovations and rental choices for medium income families. Private investment however is more uncertain given the scale of the political and social uncertainties. Exports (automobiles, machines, white goods, consumer electronics, food, furniture, ships, and construction materials) are expected to benefit from the upswings in the country’s leading markets and the depreciation in effective exchange rate. Only its exports to the United Kingdom (around 2.5% of GDP) are likely to suffer from the fall in the pound sterling. However, as imports, driven by increased consumption, will increase faster than exports, the contribution from foreign trade to growth will be virtually zero.
The public deficit is expected to widen again in 2017 and go back over the 3% threshold. Public spending will continue to increase with the first full year payment of the so-called “Family500+” children’s allowance (estimated annual cost of 0.9% of GDP). There are also plans to raise the income tax threshold. In addition, the abandoning of the plan to raise the minimum retirement age to 67 adopted in 2013 and the return to 65 for men and 60 for women is expected to cost the equivalent of 0.5% of GDP. Finally, the state as employer will feel the impact of the 8% increase in the minimum wage as of 1 January. Additional revenues will be generated through the 0.44% tax on bank assets imposed in 2016 (expected worth: 0.2% of GDP) and the increased tax rate on higher earnings. The introduction of the retail distribution tax, revised downwards under pressure from the European Commission, has been delayed until 2018 and will only bring in 0.1% of GDP. In addition, there will be no repeat of the one-off boosts received in 2016. Under these conditions, the public debt, 60% held by non-residents, is likely to deteriorate slightly. This should however be placed in context as the net debt held by the Polish public sector accounts for only 20% of GDP. Finally, the government is clearly working hard to avoid falling within the remit of the European Excessive Deficit Procedure.
The small surplus on the trade in goods, although shrinking, will continue in 2017. The trade in services will remain in surplus (in excess of 2% of GDP) thanks to tourism and international road transport. However, the surplus in goods and services is counterbalanced by the significant deficit in investment revenues linked with the extensive presence of foreign investors. Remittances for Polish workers abroad (800,000 in the United Kingdom) are offset by the remittances from foreign workers working in Poland (Ukrainians, Lithuanians, Belarusians, etc.). In the end, the current account balance will remain close to equilibrium. European funds (almost 3% of GDP) and new FDI (2% of GDP net) amounting to a stock equivalent to half of GDP, a sign of the degree of integration of Polish industry within the European production chain, will help reduce the external debt to 70% of GDP (from 73% in 2013) and boost the currency reserves held by the Central Bank.
The conservative and nationalist Law and Justice (PiS) party won a majority of seats in the Sejm in the legislative elections of October 2015, with 37.6% of votes ahead of Civic Platform, the main opposition party. Its leader, Jarosław Kaczyński, gave the post of Prime Minister to Beata Szydło, moderate in image, but retains significant influence over the government agenda. The promulgation by the conservative President, Andrzej Duda, of laws to change how the Constitutional Court operates, but deemed to be non-constitutional by this latter, has resulted in an institutional impasse, alongside the friction with the European Commission concerning the Rule of Law. As any European sanction (suspension of the right to vote) was unlikely, the Polish government ignored Brussels’ recommendations. This attitude, together with the imposition of taxes targeted at certain sectors (finance, retail, energy), in which there are significant foreign presences, could, as a result of a loss of confidence among investors and consumers, act to dampen activity. Popular opposition however forced the government to backtrack on its pledge to outlaw abortion. At the same time, the monetary authorities have tempered plans for the mandatory conversion of Swiss franc denominated mortgages (= 9% of GDP) limiting the cost for banks in reimbursing exchange rate spreads.