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Basic information

Poland, with its population of over 38 million inhabitants, is the largest member of the European Union among all the countries of Central and Eastern Europe. In terms of GDP, Poland is the 7th biggest economy in the EU and the 20th biggest economy in the world (2010 GDP in current prices, USD-denominated, IMF data).

Demographic situation and level of social development

Preliminary results of the last year’s national census by the statistics office GUS indicate that as of March 31, 2011, Poland was inhabited by nearly 38.3 mln persons. The 2011 population growth was positive, with population increasing by some 15k in comparison with 2010, according to the newest data by GUS. In 2011 Poles living in urban areas constituted 59.4% of the population, while the remaining 40.6% lived in rural areas.

Table 1 Population of the EU member states as of January 1, 2011

source: Eurostat

At the end of March 2011, there were 13.7 mln flats in Poland, which translates into an increase of 1.2 mln apartments, or 9.8%, since the previous national census in 2002, the census’ preliminary results indicate.

According to GUS, over the recent years we have observed a lowering of demographic dependency ratio: in 2011 there were 57 persons at non-productive age for every 100 persons at productive age, while in 2002 the ratio was 62:100.

A positive phenomenon observed in the years has been a continuous increase of Poles’ educational attainment level. The percentage of Poles with post-elementary education increased from 66.9% in 2002 to 78.7% in 2011. The most rapid growth was recorded in the group of people with higher education, whose share in population increased from 9.9% in 2002 to over 17.5% in 2011.

The census also shows that in 2011 as many as 1.94 mln Poles were emigrants, a number significantly higher than 786.1k Poles recorded as emigrants during the previous census in 2002.

Poland is perceived by the United Nations as a highly developed country in terms of Human Development Index (HDI), which takes into account factors such as life expectancy, the years of schooling average for 25 year olds and expected number of years of schooling of school-age children, as well as GNI per capita adjusted for purchasing-power parity. In the HDI ranking included in Human Development Report 2011 Poland was ranked 39th among 187 countries featuring on the list.

Gross domestic product

According to updated estimates by GUS announced on April 20, 2012, Poland’s gross domestic product (GDP) increased by 4.3% in 2011. In this period, investments increased by an estimated 8.3%, while domestic demand gained 3.7%.

The GUS and Eurostat data indicate that in terms of 2011 GDP growth rate Poland ranked fourth among 27 EU member states, falling behind the three Baltic States.

Table 2 World's 20 countries with highest GDP in 2010, in current prices, bln USD

source: IMF

In the light of the newest forecasts by the European Commission, Polish GDP growth is to amount to 2.5% y/y in 2012 and will be the highest amidst all the EU member states. In 2013, the EC anticipates, Polish GDP may increase by 2.8%.

Over the recent years, observers have grown accustomed to the Polish economy’s relatively good performance against the backdrop of the region of Central and Eastern Europe as well as the entire European Union. It was particularly visible in 2009, when Polish GDP, according to Eurostat data, grew 1.6%, making Poland the only EU country with a positive economic growth and earning the country the epithet of the “green island”. It was also in 2010 that Polish economy stood out among European peers: the GDP growth of 3.9% was the third highest in the EU, behind Slovakia’s and Sweden’s.

Table 3 The EU member states' 2011 GDP growth rate (percentage change on previous year)

source: Eurostat

Growing faster than its environment, Poland is catching up, in terms of economic situation, with Western EU countries. Poland’s GDP per capita in 1995 was 43% of the average of EU countries, in 2000 it was 48%, and in 2010 – 63%.

Inflow of European Union funds

Since Poland’s accession to the European Union until the Polish presidency of the European Union Council in the second half of 2011, the country has come a long way. A strong support in this process has been provided – and continues to be – by the inflow of structural funds granted in the framework of the EU’s cohesion policy. In the EU’s 2007-2013 budget, the subsidies for Poland amounted to nearly EUR 68 bln, the highest sum among the EU funding beneficiaries.

According to the Regional Development Ministry, since the launching of EU subsidies programs of the 2007-2013 framework until May 6, 2012, authorities and beneficiaries signed 69,886 contracts for the total sum of PLN 298.3 bln of qualified expenses, including co-funding on the part of the EU amounting to PLN 204.9 bln, which constitutes 74.5 percent of the allocation for the 2007-2013 period.

The inflow of EU funds may still increase in the years 2014-2020. The draft regulations concerning the new cohesion policy after 2013 approved by the European Commission on October 5, 2011, presume allocating EUR 376 bln to the cohesion policy in the next six-year budget of the EU and capping individual member states’ absorption of structural funds at 2.5% of their respective GDPs, which in the case of Poland could translate into an inflow of EU subsidies worth some EUR 80 bln in 2014-2020. According to Regional Development Minister Elżbieta Bieńkowska, „the sum will be somewhere between EUR 80 bln written down for Poland in the [draft] budget by the European Commission and EUR 68 bln.” “One cannot say how much it will be, since the negotiations are under way,” Bieńkowska said at a briefing at the beginning of April.

Polish internal market and labor market

Strong internal demand and solid private consumption are often named by economists as strengths of the Polish economy, contributing to the country’s retaining its economic growth even in the face of difficult conditions on international markets. Indeed, the first months of 2012 have shown that those indicators have been staying at good levels.

According to GUS’ Information on socio-economic situation of the country in Q1 2012, published on April 24, 2012, Poland’s retail sales (in constant prices) grew by 8.4% y/y in Q1 2012. In full-year 2011, retail sales increased by 1.3%, total consumption rose by 2.0% and individual consumption by 3.1%, according to corrected estimates posted by GUS on April 20.

Poland’s rate of unemployment in March 2012, calculated according to Eurostat’s methodology and seasonally adjusted, amounted to 10.1%, staying flat for the third month in a row. The stabilization in the three first months of 2012 follows a period of unemployment rate growth observed last year. The March unemployment figure in Poland is slightly lower than the average one for the entire EU (10.2%) and considerably lower than the average figure for the eurozone (10.9%).

Table 4 Harmonized unemployment rate in March 2012 in selected EU member states

source: Eurostat

The Finance Ministry, in the updated document Convergence Program 2012, assumed that the unemployment rate would gradually fall, amounting to 9.9% at end-2012, 9.7% at the end of 2013 and eventually 8.9% at the end of 2015, deputy Finance Minister Maria Orłowska told PAP.

Foreign direct investments – heady growth in 2011

Inflow of foreign direct investments to Poland amounted to EUR 10,340 mln in 2011 and was over 54% higher y/y, according to data by the National Bank of Poland (NBP). According to UNCTAD data quoted by the Polish Information and Foreign Investment Agency (PAIiIZ), in turn, 2011 FDI inflow to Poland increased by 46.7% to USD 14.2 bln.

Table 5 Poland’s foreign trade volumes in January-February 2012 – breakdown by countries

source: GUS

The turn of 2011 and 2012 brought weaker readings of foreign direct investments inflow to Poland: in February net FDI was negative for the fourth month in a row, according to NBP’s current account data. And still, in the view of Ilona Antoniszyn-Klik, deputy secretary of state in the Economy Ministry, FDI inflows to Poland exceeding EUR 10 bln in 2012 is possible, provided that the functioning of Poland’s special economic zones (SSEs) will be prolonged and the Finance Ministry will cooperate with the Economy Ministry at developing individual programs for investors willing to spend over EUR 1 bln. Antoniszyn-Klik added that the main threat for investment inflow to Poland may result from continued problems of the eurozone and other global economies.

Earlier FDI data indicate that Poland have so far stood out in terms of foreign direct investments (FDI) among its CEE peers. According to UNCTAD data, foreign direct investments inflow to Poland between 2005 and 2010 totaled at some USD 91.7 bln (compared to Lithuania’s FDI of some USD 7.6 bln, Latvia – some USD 6.4 bln, the Czech Republic – some USD 37.7 bln, Bulgaria – some USD 39.5 bln and Hungary – some USD 30.3 bln in the same period) In 2010 the inflow of foreign direct investments to Poland was nearly USD 9.7 bln, which ranked the country first in the region.

Foreign trade – exports continue to grow faster than imports (in mln EUR)

According to GUS’ preliminary data, in 2011 exports grew faster than imports. PLN-denominated exports in current prices were higher by 15.3% compared with 2010 and amounted to PLN 554.8 bln. Imports, in turn, increased y/y by 14.6%, hitting the level of PLN 614.4 bln. Thus, the foreign trade exchange ended the year with a deficit of PLN 59.6 bln, compared with a deficit of PLN 55.1 bln in 2010.

Table 6 Poland’s foreign trade volumes

source: GUS

In early 2012, the exports growth rate remains at higher levels than the one of imports: the PLN-denominated value of exports, in current prices, increased by 14.1% in the January-February period, while the corresponding growth rate of imports was 12.8%.

Table 7 Foreign direct investments (FDI) inflow to Poland (in mln EUR)

source: NBP

The geographical structure of Poland’s foreign trade somehow shifted in the course of the two first months of 2012: the share of developed countries (including the EU countries) in Poland’s total foreign trade turnover decreased y/y, while the significance of the CEE region countries and – the following applies only for exports – developing countries increased compared with the same period in 2011. The shift might be seen as a sign that in the face of the economic slowdown in the Western European countries, Polish companies are searching for trade partners on other, more prospective markets.

In the first months of 2012 Germany has retained its position of the leading recipient of Polish exports. Poland’s western neighbor absorbed 26.3% of Poland exports in January and February and was responsible for 20.9% of imports to Poland in the period. Germany’s share in both of the categories has decreased over the recent year only slightly – by 0.4 pps and 0.6 pps respectively.

Polish capital market – Warsaw as financial hub of CEE region

In 2011, the Warsaw Stock Exchange confirmed its position as the financial hub of the Central and Eastern Europe. With regard to the number of IPOs, the WSE came first in Europe (PwC’s data, IPO Watch Europe 2011) and third in the world (World Federation of Exchanges (WFE) data). In terms of the pooled worth of the 2011 IPOs, the WSE with the result of EUR 2.2 bln ranked third in Europe, behind the London and Madrid stock exchanges, PwC reports.

Table 8 Number of new listings in Europe in 2011 and Q1 2012 - broken down by stock exchanges

2011	Q1 2012

source: WSE

In terms of the y/y increase of the number of listed companies, which amounted to 33% in the case of the WSE, the Polish stock market ranked first in the world, outperforming even China’s Shenzhen Stock Exchange, which enjoyed a 21% y/y growth (WFE data). When it comes to equity turnover growth in 2011, standing at 25% for the WSE, according to WFE data, the Warsaw exchange was the fifth best stock market in the world and the leader in Europe.

With 25 IPOs hosted by the WSE in Q1 2012, the Warsaw bourse retained its top position in the ranking of European stock exchanges with the highest number of IPOs, while ranking fourth in Europe in terms of the IPOs’ pooled value, advisory PwC’s quarterly report IPO Watch Europe shows.

The WSE may also pride itself on its derivative instruments market, being an important one on the European arena, as well as on its fast-growing non-Treasury bond market Catalyst, run by Bondspot SA, a firm of the WSE’s capital group. In terms of trade volume of index futures, the WSE, with the result of 13.7 mln units in 2011, ranked first in the region of Central and Eastern Europe and fourth in Europe, according to data from stock exchange operators and the Federation of European Stock Exchanges (FESE). According to a statement by the WSE, in March and in the entire Q1 Catalyst saw its turnover reach record-high levels. “Monthly turnover in March amounted to PLN 380.5 mln and was nearly four times higher than in the same period last year, while the turnover in the entire Q1 2012 amounted to PLN 580.0 mln (a y/y increase of 97.3%).”

The WSE’s significance as a financial center goes beyond the European continent – the list of institutions present in Warsaw features many global players, including Goldman Sachs, Morgan Stanley, Merrill Lynch, JP Morgan, Credit Suisse, Societe Generale, UBS, BNP Paribas and HSBC, all of which have the status of the WSE’s member.
 

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