The largest economy in Central Europe has continued to demonstrate positive economic growth in 2017, following a slight slowdown in 2016. Economic growth is expected to accelerate to 3.3% in the 12 months to December 2017, compared to 2.8% in 2016, supported by stronger foreign investment.
Looking towards 2018 and 2019, the World Bank forecasts growth to remain broadly stable at 3.2% each year.
Following slower growth in 2016, the primary drivers of economic acceleration in 2017 are a combination of factors, which include new investments, largely funded by the EU, and a growth in private consumption, on the back of a strong labour market performance.
Poland, similar to other European countries, is nevertheless susceptible to a number of external factors, including Brexit and changes in the Eurozone. Polish small and medium sized enterprises (SMEs) that operate in export sectors are already reporting concerns over changes in tax law and general changes to legislation, which could potentially hinder export volumes in the coming months and years. Such factors could negatively impact the performance of the economy, reducing investment levels and thus impacting on growth.
Furniture manufacturing and exporting continues to boost the performance of the economy, with the wider manufacturing, construction and services sectors also performing positively in the last 12 months. Trade and transport has seen a decline during the same period.
Budget revenues are expected to change as a result of Poland’s improving economic outlook and government policy. This includes the introduction of new measures by the Ministry of Finance and the creation of the National Fiscal Administration (KAS) on 1 March 2017 which is tasked with improving the country’s tax and customs services.
Legal changes have been touted as the greatest barrier to the ongoing development and growth of the Polish economy but, in comparison to recent years, this concern is abating.
Although trends of worker movement to other European markets are seemingly shifting, workforce shortages in certain industry sectors are continuing to cause concern. In June, unemployment reached a 26 year low of 7.1% and many businesses are now struggling to access the labour skills they require for growth.
SME sentiment is showing notable improvement, although tinged with a level of caution. Our recent Bibby MSP Index survey highlighted that over a fifth (21%) of SMEs believe the economic standing of their companies will improve over the next 12 months. However, legislation changes associated with rising wages mean that workforce headcounts are likely to remain unchanged among SMES.
The Polish Government has proposed a number of reforms as part of the Strategy for Responsible Development, which places particular emphasis on improving the business environment and promoting innovation. In particular, there is a significant focus on driving innovation in life sciences, with Poland already home to over 100 global and Polish pharmaceutical companies and the largest pharmaceutical market in Central and Eastern Europe.