Our comprehensive assessment of Poland's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Poland, as well as the latest industry developments that could impact Poland's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Poland before your competitors.

Country Risk

Poland Country Risk

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Core Views

  • The export-driven recovery we have anticipated in Poland is now in motion, and we are now turning increasingly positive towards the country's domestic demand outlook. We expect a robust recovery in domestic demand in 2014, as low inflation, solid wage growth and an improving labour market bolster household purchasing power.

  • Poland's external position remains relatively strong and we estimate the current account deficit arrived at just 1.6% of GDP in 2013. However, a large stock of foreign-owned government paper and ongoing private sector deleveraging represent the two major risks to our sanguine outlook.

  • We continue to expect the Civic Platform (PO)-led government to serve out its term. The government won a recent parliamentary vote of confidence, suggesting its parliamentary majority is safe for the time...

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Poland Operational Risk Coverage (9)

Poland Operational Risk

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BMI View: Poland poses risks to investors in the form of limited labour force size (with highly educated workers emigrating in search of better pay), comparatively high labour costs and powerful unions, under-developed and poorly maintained transport infrastructure and costly utilities. However these are counterbalanced somewhat by the relative openness of the market to investment, well-developed financial markets, limited government intervention and one of the best higher education systems in the world. Moreover there are extremely limited terrorism risks and minimal interstate crisis potential. Due to these considerations, we award the country an overall Operational Risk score of 67.5 out of 100, leaving it in fifth place out of 30 emerging Europe states, and 42nd place globally out of 170 countries.

The labour market offers the most advantages and the most risks to incoming businesses across the entire range of...

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Poland Crime & Security

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BMI View: Poland is a generally safe place for foreign business travellers, expatriates, and tourists, with the main threats being petty crime and robbery rather violence or acts of aggression. Poland also has considerably less organised crime than its eastern neighbours Ukraine and Russia, and newer members of the EU such as Bulgaria and Romania. This is reflected in its score of 78.4 out of 100, which ranks it in joint fifth place with Estonia.

The risk of terrorist attack or political violence in Poland is generally low. The homogenous population means that there are virtually no aggrieved groups that could be galvanised against the state. The main risk stems from far-right groups or lone actors, but the former largely manifest themselves in the form of football hooliganism. Regarding lone actors, Polish intelligence foiled a planned explosive-van attack on parliament in late 2012. Poland is a potentially...

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Poland Labour Market

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BMI View: The main labour risks in Poland are increasing emigration, high unionisation and the persistent threat of strikes, low female labour participation, and the increasing labour tax burden. On the other hand, the low minimum wages and an educated workforce drive down the risks. These considerations are reflected in our strong Labour Market Risk score of 63.1 out of 100, placing Poland in fourth position regionally, out of 30 countries, positioned between by Estonia and Russia.

Two of the biggest risks in the Polish labour market are increasing labour emigration driven by the high unemployment of youth and a low female labour participation rate due to a lack of gender equality in the hiring process - factors that contribute to Poland's score of 62.8 on 100 in BMI's Availability Of Labour index, due to the significant constraints they impose. This score places Poland ninth in the region....

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Poland Logistics

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BMI View: Poland offers a developed logistics network providing direct access to international supply chains and boosts a number of investment opportunities. Investors will benefit from the minimal trade procedures and low trade costs that make the country a regionally attractive destination to companies. Investors in Poland do however face some risks in the utilities sector, with the threat of rising fuel and electricity costs, which will negatively impact companies' with operations in the country bottom lines. The overall stability of Poland's supply, however, will continue to attract investors and is highlighted in Poland's score of 62.3 in the BMI Logistics Risk Index, ranking the country fifth in Emerging Europe out of 30 states, between Latvia and Czech Republic.

Poland's impressive export growth in recent years is a significant incentive for investors. The success of the country's...

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Poland Trade & Investment

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BMI View:  Although Poland has made great strides towards improving its commercial climate, an inefficient commercial court system, bureaucratic red tape and a burdensome tax system pose challenges to foreign companies.  BMI gives Poland a score of 66.2 out of 100 for Trade And Investment Risk. This places Poland in ninth position out of 30 regional countries, with Macedonia below and Slovakia above.

The highest government intervention risk is the long time it takes for businesses to pay taxes. This is further exacerbated by the high VAT rate and the high costs of construction permits. Poland has made great strides in improving the levels of corruption and e-government readiness, and its strong intellectual property protection legislation lowers legal risks. That said, Poland has a high-risk legal system because of poor implementation of the rule of law. We score...

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Poland Industry Coverage (24)

Agribusiness

Poland Agribusiness

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BMI View:   The livestock segment is in the middle of a mini crisis as pork producers suffer the effects of restrictions on their produce imposed by Russia, China and several other important markets from the b eginning of 2014. Poultry, beef   and dairy producers are feeling the effects , as a separate Russian ban on EU food imports will hit Poland harder than any other member state. Consumers will benefit in the short term from cheaper prices as producers struggle to find new markets. Winter crops are expected to have enjoyed a strong harvest , with wheat coming close to equalling the previous year's outstanding figure and barley rebounding well. We are reasonably optimistic about the...

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Autos

Poland Autos

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In 2014, BMI forecasts total vehicle sales in Poland to increase 13.1%, to some 399,466 units. This comes on the back of a forecasted 16% increase in passenger car sales and 0.2% decrease in the commercial vehicle (CV) segment.

The country's improving consumer sentiment is increasingly filtering through to big-ticket purchases such as new cars, and we forecast 16% growth. Despite a large decline in the early part of 2013, the country's car market saw a resurgence in the latter months of the year, bringing the full-year growth rate to 6.0%. This surge in passenger car sales over the course of the year was on the back of broader improvements in the country's consumer story, which we expect to continue into 2014.

In 2013, light commercial vehicle (LCV) sales increased 7.1%, to 42,182 units, and heavy trucks increased 20%, to 19,715 units. Economic data suggest that the country's manufacturing and industrial sectors...

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Commercial Banking

Poland Commercial Banking

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...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Poland Consumer Electronics

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BMI View:   Our positive outlook for the Poland consumer electronics market is based on rising household purchasing power, supported by a combination of low inflation and employment growth resulting in real wages increasing by 3.5% y-o-y in June. The Polish retail sector is exhibiting signs of strong growth, and we expect this to translate into demand for smartphones and tablet, which will drive the consumer electronics market.  However, we have a bearish outlook for digital camera and notebook volumes in the short term, with these device categories under pressure from smartphone and tab let cannibalisation respectively. Our core scenario is for continued growth in consumer electronics spending, as we forecast a CAGR of 3.9% 2014-2018 . While there is risk from a slowdown from weaker external German demand...

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Defence & Security

Poland Defence & Security

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BMI View:   Since joining NATO, Poland's military rise has been slow, yet steady as the country seeks to achieve NATO interoperability capabilities. BMI thinks that Poland's current efforts to achieve technical modernisation are likely to depend on the success of economic growth in the wider economy. We expect that Poland's heightened sense of vulnerability to Russia in the wake of the Crimea annexation is likely to shape Poland's restructuring of the armed forces and defence industry for the foreseeable future.

BMI forecasts that Poland will spend a likely USD8.2bn on defence during 2015, which would represent a 7% year-on-year increase from 2014 when defence spending was reduced due to a slow-down in economic growth. We think European and international companies may...

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Food & Drink

Poland Food & Drink

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We hold a positive outlook on the Polish consumer over the next few years, after several years of sluggish growth. We expect real GDP growth of 2.8% in 2014 and 3.1% in 2015, which will be fuelled by strong private expenditure growth.

Household purchasing power will be driven by a combination of low inflation and employment growth. Our Country Risk team believes that there remains considerable slack in the labour market, and our Agribusiness team believes that there is little threat of high food inflation in the coming months. As such, we believe that there is considerable room left for private final consumption growth over the coming quarters.

Russia's ban on agricultural imports from EU countries will damage fruit and vegetables producers in particular in Poland, who export much of their produce to Russia. Fewer exports to Russia, however, is likely to drive down food price inflation in Poland which will be beneficial...

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Freight Transport

Poland Freight Transport

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2.8% GDP Growth Expected This Year

BMI remains fundamentally positive about the Polish economy, although a little below consensus in our growth forecasts. Underpinning this is our view that domestic consumption will remain strong, stimulated by low inflation, rising employment, and low interest rates. Household consumption represents a larger share of the Polish economy - around 60% - than in some of its Central European neighbours (around 50% for Slovakia and the Czech Republic). This gives Poland extra resilience to any headwinds coming from the external environment. That said, we are also positive about the contribution net exports will make to the country's ongoing recovery. This, however, is where we are a little more cautious than the consensus. We see risks that declining Asia demand will feed through into weaker German factory output, in turn dampening demand from Polish supply chains....

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Information Technology

Poland Information Technology

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BMI View:   W e see Poland as one of the most attractive IT markets in the region over the medium term based on its untapped potential amid ongoing technology trends and are becoming increasingly bullish as our strong macroeconomic outlook plays out. Household purchasing power is being supported by a combination of low inflation and employment growth , and we expect rising incomes will drive retail hardware spending . H owever in the short-term the rapid transition in consumer spending away from notebooks to low-cost tablets, will sustain unit sales   growth but squeeze the total value of sales. ...

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Infrastructure

Poland Infrastructure

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BMI View :   BMI has upgraded its outlook for 2014 as market data shows stronger recovery, in particular from the residential sector. New tranche of EU funding with details about financing being finalised add further upside to our forecast despite the ongoing impact of the road-building debacle, weighing on productivity, capacity and investor sentiment. As such, we expect annual average growth of 5.1% between 2015 and 2018.

Poland's construction sector experienced a 9% contraction in 2013, in line with our estimate for a 10% contraction, and wiping PLN11.8bn off the total industry value, while more than 300 companies in the industry faced bankruptcy - including some of the country's largest builders. Albeit infrastructure sector is still struggling to recover in the aftermath, there have been positive signs as the...

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Insurance

Poland Insurance

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BMI View : Poland continues to be the most important market in Central and Eastern Europe. While growth in premiums in 2014 is expected to come in relatively flat many of the amjor insurance companies should still register profits. At the same time the move towards a less fragmented life and non-life sector is expected to continue.

The insurance market in Poland is the largest in Central and Eastern Europe and one which is important within a regional context. Recent commentary forum the major players as well as recently publoshed data indicated that the surge in sales of single-premium insurance products to individuals has reveresed, despite this, demand for other products has remained steady. With the stabilisation of the life sector, we expect continued growth in the life insurance's role as a conduit for organised savings over the next few years.

Poland stands in...

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Medical Devices

Poland Medical Devices

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Espicom Industry View: The Polish medical device market is expected to grow by a CAGR of 7.7 % over the 2013-2018 period, due to the strengthening of the economy, and subsequently, medical device imports. Poland is heavily reliant on imported medical devices a nd this is expected to remain the case for the time being , as n o ma jor developments are foreseen for the domestic medical device industry in the short-term .

Headline Industry Forecasts

...

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Metals

Poland Metals

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The economic recovery in Poland continues to gather momentum, with leading and coincident indicators - particularly retail sales and wage growth - pointing towards improvements in domestic demand in addition to the export-driven real GDP growth that arrived in the second half of 2013. The acceleration in euro area growth, particularly in key trade partners such as Germany will continue to drive forward Polish export growth - especially in the autos sector. Furthermore, the recovery in international trade will continue to feed-through into the labour market, resulting in positive employment gains as hiring improves. 

Real GDP grew 2.7% year-on-year (y-o-y) in Poland in Q413. While the reading was slightly lower than consensus expectations for 2.9%, BMI had been cautioning for some time that market expectations for Polish growth had been turning slightly too exuberant, despite the positive outlook. Nonetheless, the...

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Mining

Poland Mining

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BMI View:   Growth in the Polish mining sector will be modest and predominantly driven by increased coal output. Copper output will struggle as falling copper ore grades and weak prices are set to hinder growth. Nevertheless, the rate of growth we forecast indicates that the country will remain one of the most significant players in the European coal, silver and copper markets.

Modest Growth Across A Range Of Minerals
Poland - Mine Output

Downside Risks

The main...

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Oil & Gas

Poland Oil & Gas

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BMI View : We have revised down our long-term gas   production forecast due to recent disappointing shale drilling results. More time, additional exploration and below-ground data will be required to obtain a better idea of the country's actual shale gas potential and to optimise the drilling and hydraulic fracturing processes required   for   Poland's challenging   geology. We have factored   in a small and progressive uptick in shale gas production from 2020 onwards.

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Headline Forecasts (Poland 2012-2018)

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Petrochemicals

Poland Petrochemicals

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The Polish petrochemicals industry continues to face a challenging domestic market and a slow recovery in external markets, which have combined to depress output growth of basic polymers, according to BMI's latest Poland Petrochemicals Report.

The overall trend is downward across the range of major polymers. In H114, overall plastics output was down 0.2% year-on-year (y-o-y) to 1.35mn tonnes. While polyethylene was up 0.3% to 179,000 tonnes, there were significant declines in other major basic polymers. PVC was down 4.7% to 142,000 tonnes, synthetic rubber was down 4.9% to 92,800 tonnes and polypropylene was down 15.1% to 111,000 tonnes.

PKN Orlen has announced plans to invest PLN10.8bn (USD3.51bn) on development projects between 2014 and 2017, focusing on the downstream segment, which will account for 59.3% of total expenses. According to a company note, the projects will...

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Pharmaceuticals & Healthcare

Poland Pharmaceuticals & Healthcare

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BMI View: Poland ' s pharmaceutical market is the second largest in Central and Eastern Euro pe. Integration with the EU has created greater opportunities for foreign firms in the pharmaceuticals sector. Despite negative regulatory constraints, we believe a large and aging population along with its associated burden of disease will drive the demand for both patented and generic medicines in the future. We maintain our view that the lack of exposure to Russia and the regional tension help make Poland one of the most attractive markets in Central and Eastern Europe.

Headline Expenditure Projections

  • Pharmaceuticals: PLN32.39bn (USD10.25bn) in 2013 to PLN33.53bn (USD10.33bn) in 2014; 3.5% in local currency terms and 0.8% in...

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Power

Poland Power

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BMI View: Coal-fired electricity generation will continue to dominate Poland's energy mix despite pressure from the EU to curb coal use and reduce emissions. Under new Prime Minister Ewa Kopacz, Poland will continue to resist the EU's proposed 2030 energy and climate change targets - with a view to extracting concessions. Concerns about energy security and rising electricity bills will continue to trump green energy policies.

Our forecasts for the Polish power sector will continue to be underpinned by the country's desire to burn cheap domestic coal for power generation. Under former Prime Minister Donald Tusk, who resigned in September to become President of the European Council, coal was set to remain a critical component of the country's power mix. This was not only in order to support Poland's politically important coal mining industry, but also to ensure energy security amidst fears that...

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Real Estate

Poland Real Estate

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BMI View: Steady macroeconomic growth has provided substantial growth and investment activity in the commercial real estate sector in 2014. This is likely to carry on in 2015 as wider economic growth picks up pace. These developments emphasise Poland's dominance as the most stable and commercially attractive market within Central and Eastern Europe.

Through a focus on the principal cities of Warsaw, Krakow and the Tricity area, the Poland Real Estate report examines the commercial office, retail, industrial and construction segments throughout the country. With the wider Polish economy remaining in steady growth, investment momentum in 2014 has spread through all three commercial real estate sub-sectors sector that we cover. The first half of 2014 saw...

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Renewables

Poland Renewables

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BMI View:   Poland's reluctance to adopt stringent EU emissions targets for 2030 sends warning signals to potential investors in the country's renewables industry. Poland's wavering support for renewable energy and - by extension - the uncertain regulatory environment has long been a key concern, undermining the long-term growth prospects of the sector, despite the recent approval of the RES law.

Poland aims to derive 15% of its energy production from renewable sources by 2020, and we expect the wind and biomass segments to drive growth in the renewables industry. However, Poland remains at odds with the European Commission (EC) amidst concerns that implementing green energy policies will spike domestic electricity prices, destroy Poland's coal mining industry and harm the economy. We do not expect the approach to EU energy policy to change under new Prime Minister Ewa Kopacz, who has...

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Retail

Poland Retail

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BMI View:   Poland remains the most in demand retail market in the Central and Eastern European (CEE) region. BMI expects the Polish retail market to continue maturing over our forecast period to 2018. Global retailers, especially within the clothing and accessories subsector, are continuing to enter the market.

In the two decades since its transition from socialist state to free market economy, Poland has experienced an average annual GDP growth of 4%. In 2015, BMI forecasts its GDP at USD574bn, up from USD518bn in 2014. Even though the country's growth has slowed in recent quarters, BMI forecasts that Poland's middle class will continue to expand, with an estimated 16.2% of its...

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Shipping

Poland Shipping

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BMI remains fundamentally positive about the Polish economy, although a little below consensus in our growth forecasts. Underpinning this is our view that domestic consumption will remain strong, stimulated by low inflation, rising employment and low interest rates.

Household consumption represents a larger share of the Polish economy - around 60% - than in some of its Central European neighbours (around 50% for Slovakia and the Czech Republic). This gives Poland extra resilience to any headwinds coming from the external environment. That said, we are also positive about the contribution net exports will make to the country's ongoing recovery. This, however, is where we are a little more cautious than the consensus. We see risks that declining Asia demand will feed through into weaker German factory output, in turn dampening demand from Polish supply chains.

For 2014, we are forecasting real GDP...

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Telecommunications

Poland Telecommunications

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BMI View: Poland is one of the largest telecoms markets in C entral and E astern E urope , with vibrant competition across all market segments. This has benefited consumers through service innovation and lower prices, but operators' aggressive marketing strategies have increased the downward pressure on average revenues per user , which continue to trend downwards and result in narrowing margins . In light of this recent experience operators are targeting growth of high value high - speed fixed broadband subscription growth, as well as mobile broadband growth via dedicated...

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Tourism

Poland Tourism

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BMI View: The ongoing tensions between Russia and Ukraine will substantially affect our forecasts over the next year or so, as Ukraine is traditionally one of the largest source markets for the P olish tourism industry, and also represented the most po pular destination for outbound tourists in previous quarters. However, owing to the continued security issues represented by the Russian appropriation of Crimea, we have revised down our forecasts for these indicators, as we do not believe that as many Ukrainians will opt for costly foreign holidays, nor do we view Ukraine as an attractive holiday destination at present.

The Ukraine/Russian conflict represents the largest threat to the continued growth of the Polish tourism sector at present, as Ukraine...

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Water

Poland Water

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BMI View: Despite a limited number of natural water resources, Poland is putting an impressive amount of energy into developing its water sector. Much of this development is an attempt to comply with EU regulations regarding sustainable water usage and the government has put significant time and finance into the necessary developments. Extra attention has been given to the treatment of wastewater to ensure that the natural resources do not become polluted and , therefore , unusable. This is a serious threat to the sector as there is a big drive to increase the amount of households connected to mains water; a change that could result in a large increase in wastewater. This focus on growth and a distinct openness to foreign financial input suggests that the sector is very attractive to potential investors.

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