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: Polish meat producers remain in a challenging situation due to import bans imposed by several states on Polish pork and by Russia on agricultural produce from all EU member states. Although pork producers are facing the greatest pressure, we believe they have the potential to bounce back more quickly thanks to a strong base of domestic demand supplemented by growing export opportunities. Dairy producers are also suffering blowback from the embargo although a more general fall in prices is a bigger concern. We expect 2015 to be a difficult year, but the longer term outlook is more promising as we expect prices to recover and demand for processed dairy products to increase. Sugar production looks to have stalled after 2012/13's recovery and we are no longer so positive about the capacity of the industry to compete post liberalisation as yields have remained stubbornly low.

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Autos

Poland Autos

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In 2015,  BMI forecasts total vehicle sales in Poland to expand 4.8% to 418,492, representing a slowdown in growth after a projected increase of 13.1%, in 2014. This comes on the back of a forecasted expansion of 5.0% in passenger car sales and a return to positive growth in the commercial vehicle (CV) segment which will increase by 3.5%.

In the passenger car segment, the country's improving consumer sentiment is increasingly filtering through to big-ticket purchases such as new cars. Despite a large decline in the early part of 2013, the country's car market has seen a resurgence over 2014 with sales projected to expand by 16.0% to 336,299 units. Improving employment levels and continued consumption growth will mean that sales momentum will carry through to 2015 when sales will expand by a further 5.0%. 

In 2015, we maintain our forecast for the LCV segment to increase 3.8% and the heavy truck...

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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, are likely to drive down food price inflation in Poland which will be...

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Freight Transport

Poland Freight Transport

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Another Year O f Freight Growth In 2015

In 2015 Poland's freight transport sector will experience another year of growth: in most modes it will edge slightly ahead of the pace of expansion experienced in 2014. This will come on the back of slightly faster GDP and trade growth in the country. Some freight modes will have the additional benefit of increases in capacity or extra demand because of Poland's role as a gateway into north-eastern Europe. Reflecting the rapid development of its capacity, as well as its good business links, the port of Gdansk will see gross tonnage growth of 6.1%. Road freight will also do well, with cargo volume up by a healthy 4.8%.

We are optimistic about the outlook for the Polish economy in 2015, predicting that GDP growth will accelerate to 3.1%, up from an estimated 2.8% in 2014. In fact, despite a slowdown in some of the country's leading...

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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 is the most important insurance market in Central and Eastern Europe. We anticipate steady, if unspectacular growth in total premium income throughout the forecast period after a small contraction in 2015 . Poland is not a e urozone country and the government is unlikely to gain the mandatory backing required from the country's parliament to change this before 2020 at the earliest. With continuing concerns regarding the e urozone project, this may well turn out to be to Poland's benefit over the next few years.

The insurance market in Poland is the largest in Central and Eastern Europe and one which is therefore important within the region. According to a report from the European federation of associations of...

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Medical Devices

Poland Medical Devices

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BMI 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...

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Metals

Poland Metals

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BMI View:   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.   This all bodes well for the metals industry in Poland, within which we are forecasting uninterrupted growth from 2014 through to the end of our forecast period in 2018.

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Mining

Poland Mining

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BMI View:   Growth in the Polish mining sector will be modest over the coming years. The coal sector will be overhauled as the government seeks to either restructure or close unprofitable mines. 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
...

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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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BMI View:   Although petrochemicals output fell in 2014, BMI 's latest Poland Petrochemicals Report predicts an improved performance in 2015 as end use industrial consumers - particularly in the automotive and construction industries - see a more optimistic scenario on both domestic and external markets.

Major polymers witnessed a sharp decline in output in the first nine months of 2014, suggesting that capacity utilisation was low. Polyethylene was down 6.1% year-on-year (y-o-y) to 249,300 tonnes, polypropylene fell 15.5% to 166,900 tonnes, PVC declined 9.9% to 210,700 tonnes and synthetic rubber fell 2.3% to 143,000 tonnes. Weaker export orders have been blamed for the softening Polish industrial production data. A deceleration in manufacturing output was the main driver for the decline, most likely due to weaker German...

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Pharmaceuticals & Healthcare

Poland Pharmaceuticals & Healthcare

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BMI View:   Released retail pharmacy and national health insurance reimbursement data supports our earlier assertion of a rebound in Q214 and reinforces our full - year forecast for pharmaceutical sales in Poland. We see unemployment trending downwards and rising household consumption boosting overall GDP growth and feeding into an uptick in healthcare expenditure and pharmaceutical sales over the next five years. Over-the-counter medicines and generics will continue to be the primary drivers of growth, with regulatory hurdles holding back sales of innovative drugs.

Headline Expenditure Projections

  • Pharmaceuticals: PLN32.39bn (USD10.25bn) in 2013 to PLN33.58bn (USD10.71bn) in 2014; 3.8% in local currency terms and 4.5% in US dollar terms. ...

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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: Further macroeconomic growth in 2015 is set to provide the Polish commercial real estate sector with the basis for its continuous upward trend. International investors and growing domestic consumer confidence are two main factors in improving demand levels. Poland therefore continues to defend its position as the most stable and commercially attractive market in the region.

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 in the country. With the wider macroeconomic situation in Poland expected to improve further in 2015, investments in the commercial real estate sector are also...

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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:   As a member of the EU and OECD, Poland remains of the wealthiest countries in CEE and demonstrates a high level of saturation in its retail sector. Poland was threatened by a number of Russian sanctions in H2 2014, however because of the strong domestic consumption and success in diversifying its export markets, it has proven its resilience against external threats and is expected to post an impressive 4.5% growth in GDP in 2015. External demand shocks and slowdown in euro area are holding back the rise in the prices as inflation amounted to only 0.4% in 2014 and will rise to 0.9% in 2015 ultimately benefitting the consumers in the country.

High integration in the Western European economy has had slightly negative effects for Polish consumers and businesses in the recent months. First, farmers in Poland, as in many other European Union states, were hit by...

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Shipping

Poland Shipping

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Although we were surprised by the National Bank of Romania (NBR)'s policy rate cut to 3.25% on August 4 (we expected rates to be held at 3.50%), this does not materially change our bullish Romanian leu versus bearish Hungarian forint view. Low inflation (just 0.7% y-o-y in June) is likely to have prompted the cut, even though domestic demand remains strong. Indeed, inflation is above the NBR's 2.5% ±1.0% target when food prices are excluded from inflation calculations and retail sales expanded by a robust 10.3% y-o-y in June.

We withhold from adjusting our interest rate forecasts until a detailed monetary policy statement is released by the bank, but do not expect further cuts or significant leu weakness over the coming months. Indeed, the currency remained unmoved on the back of the cut, and we are up 1.0% in our bullish RON vs bearish HUF view in our asset class strategy tables ( see chart below).

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Telecommunications

Poland Telecommunications

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BMI View: Poland is one of the largest telecoms markets in Central and Eastern Europe, with vibrant competitio n across all market segments. High mobile penetration leads BMI to believe that the market will not have much scope for growth. Intense competition will also erode telecoms operator revenues. In the light of this, operators are targeting growth of high value, high-speed, fixed broadband subscription growth, as well as mobile broadband growth via dedicated subscriptions and smartphones . Two new services were introduced in the wireline sector, but BMI believes that they are unlikely to have a big impact on the market .

Key Data

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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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In recent years and, indeed, currently, the Polish water sector has undergone a significant amount of work. The Polish government are keen to continue developments that were initially brought about by the need to comply with EU regulations. The country has a limited amount of natural water sources and is, therefore, putting emphasis on sustainable water usage and efficient wastewater treatment. Not only will this ensure that demand is met, but will also protect the precious natural resources from becoming polluted by untreated wastewater - a very real threat with the ever-increasing number of households becoming connected to mains water. With this continuing growth and the potential privatisation of the sector in the near future, the investment environment is very attractive.

Currently, the Polish water sector is mostly government-run. This has resulted in a sector that is very well...

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