Poland

The story of economic success and transition to democracy. Poland is the largest country in Central Europe which can currently boast one of the longest periods of economic growth in the Western world - 25 years. Starting from 1989 Poland has undergone an impressive transformation securing its position among the European democracies and most promising economies. This steady growth had a visible impact on Polish city landscapes.

Tourism 

Poland is becoming increasingly attractive as a tourist destination. Its natural environment, modern infrastructure and improving access to culture and national heritage of exceptional value make the country popular with international tourists. While hard currency earnings in the tourism segment are on the increase. The most visited tourist destinations in Poland include the Tatra, Karkonosze, Stołowe and Pieniny Mountains; Białowieża Forest; Masurian Lake District and the Wolin National Park. The most popular cities are Kraków, Wrocław, Gdańsk, Warsaw, Poznań, Lublin and Toruń. Poland is one of Europe’s most heavily forested regions, with forests covering almost 30% of the country’s total area. Lands of particular natural value are protected within 23 national parks with the area of nearly 317,000 ha, enjoyed by around 11 million visitors every year. Natural sites protected by Natura 2000 include bat refuges of the Beskid Wyspowy mountain range, the Vistula Gorge near Kazimierz, the Bieszczady Mountains and the Middle Noteć Valley with Bydgoszcz Canal. All around Poland new themed hiking routes are established, such as archaeological or architecture trails. That way tourism gains new quality by combining physical exercise, contact with nature and discovering historic buildings and sites. Tourism intensity is seasonal. Estimated Stats on domestic tourism activities of Polish households indicate that the most popular destination for domestic tourism was the seaside (43.4%), followed by rural areas (27.6%) and mountains (19.4%).

Agriculture

continues to be a significant sector of the Polish economy. With a share of 11.6% in the total number of employees, it contributes ca. 3% to Poland’s GDP. In terms of the contribution to GDP, agriculture is the fourth biggest sector in the country and it is significantly higher compared with the Community’s average level. It places Poland as the sixth food producer in the EU. Poland ranks first in the production of fruit such as apples, raspberries, cherries and blackcurrants. Poland also has extensive potatoes (1st place) and sugar beet (3rd place) production in the EU. As for cereals, Polish farmers are leading producers of rye and wheat. Poland is also a very important exporter of milk and meat, especially in the poultry segment, which is the biggest and most cost-effective in the EU. Compared with the EU average, Polish agriculture is highly fragmented with 73% of small, traditional farms covering over 30% of land. The increasing average size of farms and the introduction of innovative technologies are seen as primary measures designed to boost productivity. The implementation of those measures will be partially driven by EU’s financial support. Poland, as the largest beneficiary of EU subsidies in the 2014-2020 financial frameworks, is planned to receive EUR 32B under the Common Agricultural Policy. The optimistic outlook is also supported by farmers as 40% of them view state-of-the-art agricultural machinery as a key success factor for the upturn.

Automotive 

sector is one of the key branches of the Polish economy. Its significance is reflected in the labor market. Around 180,000 people work in the automotive manufacturing industry, making it the fourth largest industrial employer in the country. In 2016 there were 677,000 vehicles produced in Poland, which is a 3.2% increase from 656,000 cars produced in the previous year. In 2015 Poland ranked the eighth largest car manufacturer in the EU and the fourth in the CEE region. During the last decade the Polish market has attracted numerous Original Equipment Manufacturers (OEMs). Car production in Poland concentrates in two industrial hubs: Upper Silesia (Fiat and Opel facilities), and the Greater Poland region (VW). This increase in vehicle production is partially driven by the number of OEMs, which have recently made investments in Poland. The most notable ones include:

1. Production of the fifth-generation Astra started in GM’s Gliwice facility in 2015
2. In 2016 a new Volkswagen facility in Września started the manufacturing of Crafter. Its expected capacity is 100,000 vehicles annually 

In the coming years the Polish vehicle output is expected to increase with a 6% growth rate for 2017 and 2018. Domestic car sales are also on the rise. 476,000new cars (passenger and LCV) were sold in 2016, which is 17% more compared with the previous year. Vehicle sales in 2016 were dominated by the VW Group’s brands, with Skoda and VW in the first positions and Toyota claiming the third place. The number of vehicles sold is forecasted to grow at an annual rate of 3.0% in 2017 and 2.3% in 2018.

Business Services

The Services Sector, consisting of BPO, IT, SSC and R&D companies, is one of the fastest developing industries in Poland. It benefits from the global trend of centralization of back office functions, where availability of skilled and dedicated employees together with labor costs arbitrage are the most important factors when deciding about future locations of business. During the last 5 years, the Business Service Sector has become one of the largest employers in the country, with employment in 2016 exceeding 212,000 people working in over 930 companies with both Polish and foreign capital. The increase in the number of jobs in the last year exceeded 25%, which is more than in previous years. Current dynamic development of the industry is happening thanks to both new centers being set-up, as well as the consistent employment growth within already established ones. Currently, there are 37 centers employing over 1,000 people each.

The sector is on the rise from the perspective of its size, measured by the growing quantity of different types of centers and the increase in new job openings. Industry is also evolving, rapidly increasing the complexity and quality of provided services. Business Services Sector operates mainly (with 90% of workforce deployed there) in seven cities and metropolitan areas (MAs): Kraków, Warsaw, Wrocław, Katowice MA, Tri-city MA, Łódź and Poznań. In each of those, the sector employs over 10,000 people, with Kraków being the most saturated city, with over 50,000 people working there in that industry. Forecasts for the following years are still very good. In the near future, Poland will remain a first choice location for centers for companies operating in the European market in general. It is estimated that the total number of jobs in the sector will grow to 300,000 in 2020.

Defence

Poland has embarked on an ambitious plan of investment in and modernization of the Polish armed forces. Combined with the statutory target of military spending at 2% of the GDP (one of the highest among NATO countries, and intended to be raised in the not-so-distant future, the outlook for the Polish Defense sector looks auspicious. In 2017 alone, Poland plans to spend USD9.3bn1 on defense, 1.3% more than in 2016. The budget for asset-related spending, such as armaments, military equipment, and investments in the NATO infrastructure, is USD2.6bn. The Defense sector is one of the growth drivers behind the government’s key strategic program: Plan for Responsible Development. A regular expenditure on Defense of around USD10bn per annum is expected in the years to come. Poland’s military budget has a number of crucial components, including key priority areas and the Technical Modernization Plan (of the Polish armed forces). The former focus on development of an anti-missile defense system (Program “Wisła”), cyber security, investment in the Navy (acquisition of submarines; Program “Orka”), purchase of utility and attack helicopters (Program “Kruk”), build-up of the Territorial Defense (new military force), and enhancement of the command system and structure. The TMP, while dovetailing with the overall key objectives (e.g. the AMD), additionally prioritizes investment in and technological advancement of air defense systems and armored and mechanized forces. Plans also include an increase in the number of troops up to 130 thousand (currently Poland has 49 thousand troops in the land forces; 16 thousand in the Air Force; 7 thousand in the Navy, and 30 thousand in other segments). Specific programs are designed to address all the key priorities.

Aerospace 

Aerospace industry in Poland is one of the growing areas of the Polish economy. This growth is driven by a global demand for products manufactured in Poland as well as the local demand underpinning the increasing number of airline passengers and development of associated infrastructure. 

Manufacturing in this industry is concentrated in the Polish Aviation Valley – a specialized industrial cluster in the South East part of Poland with a concentration of aerospace manufacturers, scientific research centers and educational and training facilities, with over 100 operating companies and more than 23,000 employees. The Aviation Valley generates 90% of Polish aviation industry production. The production potential of the Aviation Valley has been dynamically increasing due to new direct investments by international corporations. As a result, the total annual exports rose from USD 0.25bn in 2003 to USD 2.0bn in 2014 (CAGR of +21%). Major Polish aviation manufacturers have been acquired by large multinational companies, e.g. PZL Mielec (acquired by Sikorsky Aircraft Company), PZL Świdnik (acquired by AgustaWestland), etc. These companies tend to be located in the Aviation Valley and their portfolios include civil and military products. 

Poland is also home to a number of aerospace component producers - PZL Rzeszów (United Technologies Corporation), Pratt & Whitney Kalisz (United Technologies Corporation), EADS PZL Warszawa-Okecie (Airbus Military). Due to the fact that the Polish domestic market is rather small and Polish aviation producers are owned by multinational players, the production and sales volumes are mainly driven by the global trends. The growing number of airline passengers in Poland drives the development of airlines and companies servicing the air transport sector (e.g. handling, MRO). In 2016, Polish airports served over 34 million passengers and this number has been growing constantly since 2009. This growth was possible due to a significant development of infrastructure, with 15 airports currently operating in Poland. The Civil Aviation Authority forecasts that in 2030 the number of passengers will reach over 59 million which will further increase demand for associated aerospace products and services.

Information, Communication & Technology

Poland maintains its leading position as a near-shore destination for IT companies from Western and Northern Europe. Poland was also the ‘number one’ destination in the CEE region in terms of R&D projects, driven essentially by international software companies. Additionally, the ICT industry influences the growth of the outsourcing sector in Poland. The average year-on-year growth of this sector in Poland is estimated at around 20% and according to the Polish Investment and Trade Agency more than 40% of all outsourcing centers in CEE are located in Poland. The key factor which makes the ICT sector one of the most innovative sectors in Poland is education. Well-skilled Polish programmers, investment in developing programming faculties at universities and promoting the subject of mathematics in the school education system are the features that put Poland at a noticeable advantage over other developing countries. Based on the Global Competitiveness Index 2014-2015, Poland has already embarked on the task of shifting from the efficiency driven to innovation-driven economy. ICT have evolved into the “general purpose technology” of our time, giving their critical spillovers to other economic sectors and their role as industry-wide enabling infrastructure. Therefore, ICT access and usage are key enablers of the countries’ overall technological readiness and the ICT industry will play the most influential part of this transformation. Growing financial support (EUR 82.5b from EU funds only) and the promotion of investment in new technologies will finally lead to Poland’s success regarding innovations. On the one hand, the Polish e-commerce market is developing very rapidly - by 2018, the share of e-commerce in Poland should grow to 8% of the total retail trade. Poland holds the 10th position as the hub of the fastest growing companies in the Europe, Middle East and Africa – (EMEA) technology market, and the video game market has 120+ game studios producing about 150+ games per year. Some of the most popular video games on mobile platforms are products designed by Polish developers. The Polish ICT market is growing rapidly in the outsourcing area, delivering value to foreign investors, the SME sector is on the fast-track to growth, while traditional industries and the governmental sector have room for improvement by absorbing ICT technology to enhance their effectiveness. It will be an additional booster for growth of the IT market in Poland.

Infrastructure 

The infrastructure gap between the demands of modern society and the current capabilities are the main criteria of prosperity considered by key policy stakeholders in Poland. Investments in various types of infrastructure have maintained the key role in the convergence of the Polish economy since the EU accession. 

For years 2014 – 2020 Poland will receive EUR 77.6 billion from EU structural funds, of which 27.4 billion will be spent through national Operational Program Infrastructure & Environment. This facility will support most important national level investments, such as construction of motorways and expressways, railways, public transport, seaports, waterways, as well as substantial investment in waste and water management systems or energy efficiency. Major proportion of EU funds (more than 50%) will be managed at regional level, through Regional Operational Programs. Although their impact is visible at the local level, the aggregated amount of regional funds is as significant as those managed nationally. Investments in road and rail infrastructure encompass the bulk of Polish government priorities in transportation and other public services. The worth of planned road infrastructure projects to be performed until 2023 amounts to EUR 35.7 billion, while rail infrastructure projects to be implemented in the same time period are worth EUR 15.2 billion.

Rail Infrastructure

Currently there are about 19 thousand km of railways in Poland. Over 90% of them belong to national infrastructure manager PKP PLK S.A. According to National Rail Program for 2015 – 2023 timeframe, rail investment projects will be financed mainly from European Union Cohesion Fund (EUR 7.1 billion) and Connecting Europe Facility (EUR 4.2 billion), supplemented by European Regional Development Fund (EUR 1.6 billion) and governmental funds (PLN 2.3 billion). The main goal of investments is establishment of a modern and consistent railway transport system. Particularly, investments aim at increasing transport effectiveness, security and quality. Program encompasses implementing the European Rail Traffic Management System, which will increase the capacity of international rail operations and increase the speed on selected lines to over 160 km/h. Around 8,500 km of railways will receive funding for various investments until 2023.

Road infrastructure 

Currently, there are 19,000 km of national roads, including motorways and expressways. In the last 10 years’ length of expressways and motorways has increased 3 times. Nevertheless, main disadvantages of the national road network are lack of consistency, inability to carry loads of 11.5 tons per axle on many road stretches and high traffic volumes going through built-up areas. The sum devoted for road projects contains up to EUR 22.3 billion designated for the construction of motorways and expressways and EUR 2.2 billion for the construction of ring roads. Poland is obliged to complete construction of the core TEN-T network, consisting of 3 890 km of roads, till the end of year 2030. 7 400 km long, core and comprehensive network is supposed to be finished by 2050.

Airport infrastructure 

Warsaw Chopin Airport is the main Polish international hub, supported by 14 regional airports which provide fine national and international connections. All airports received substantial public and EU support (including Greenfield projects) in years 2007 – 2013. In general, all facilities have modern land- and airside facilities and provide appropriate capacity. Further investments shall be implemented based on business case feasibility, except for improvement of airport security systems which will receive public support. Maritime and inland waterways infrastructure Gdańsk and Gdynia are the main container hubs in the Baltic Sea region with direct calls from Asia, whereas Szczecin and Świnoujście host new LNG terminals. The Polish government has also planned to spend EUR 2.1 billion for development of inland waterways up to 2020. Seaports will receive public support for infrastructure projects amounting to EUR 2.7 billion. In particular, hinterland accessibility of seaports will be improved. These will be supplemented by private investments of terminal operators.