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 multi-year 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 ruble-based 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 co-organizer 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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