Poland - Shifting up a gear?

So Poland has now got a new President after the tragic loss of President Lech Kaczynski in the tragic air crash in April and the country’s subsequent national mourning. It has also suffered severe flooding in the South of the Country, in May, but this didn’t hit the international screens in quite the same way as more recent floods.

Bronislaw Komorowski of the ruling Civic Platform (PO) party, acting president between April and 4^th July, is Poland’s new president. He received 53% of the vote, against 47% for his rival, Law and Justice (PiS) leader Jaroslaw Kaczynski, brother of the deceased President.

So how is the country faring in the aftermath?

The shocks set off by the global financial crisis are still reverberating around the world, but that has not stopped Poland….

Latest data show that the economy is still strengthening, driven by manufacturing gains, reviving foreign demand and a more gradual growth in domestic demand. There is still a degree of dependence on the Global economic recovery, as there is with many countries around the World.

Poland can look to GDP growth of  3.1% this year and 3.5% in 2011, according to the International Monetary Fund (IMF)*. This compares to 3.2% and 3.4%, respectively, for the Central and Eastern Europe (CEE) region as a whole. Growth in the eurozone is forecast to reach 1%

Poland attracts foreign investors

Poland continues to be an attractive place for investments, owing to relatively stable economic conditions, compared with other countries in the region. There is an expectation that Foreign Direct Investment (FDI) will reach €10bn, in 2010 a level last recorded in 2008.

Companies continue to see the benefits of basing parts of their operations in Poland:

• McKinsey, the consultancy, is opening a knowledge centre in the western Polish city of Wroclaw, similar to its other outsourcing centres in China, India and the US.

• Hewlett-Packard (HP), the US computer group, is to create up to 700 new jobs at its Global Business Centre in Wroclaw over the next few years, as the facility assumes a key role in supporting decision-making processes at the group’s subsidiaries in Europe. The Wroclaw centre, created 5 years ago as the first Business Process Outsourcing (BPO) centre in the city, employs 1,800 staff.

Even China is investing….

• It is the first investment by a Chinese firm in the Łodz  Special Economic Zone (LSSE). This Summer a 5,700 m² factory for Yuncheng Poland, part of China Shanxi Yuncheng Plate Making Group, (one of the world’s leading makers of printing cylinders), is being built in Konstantynow Lodzki. The cylinders will be used as part of the production of packaging materials for food and pharmaceutical sectors.

Last year’s success for Poland, was due in part to the continuation of projects initiated before the onset of the global crisis, and to Poland’s exceptional performance as the only EU country not to fall into recession.

The two key areas for investing in Poland are the car sector, especially parts suppliers, followed by business process offshoring (BPO).

Poland is particularly attractive because salaries are significantly below those of western Europe – a software engineer costs about €1,500 a month – while the workforce is quite skilled. There is an expectation it will take 15 to 20 years before wages catch up to western levels.

In addition the infrastructure is continually improving. EU structural funds pouring into Poland; together with government funds they will total more than €100bn until 2013.

The General Directorate for National Roads and Motorways (GDDKiA) has spent almost PLN 45bn (€11.5bn) on road projects in the past two and a half years**, as reported by.

Implications for Polish Property Investment?

It is expected overseas investment in Polish property will be over €2bn in 2010, compared with €700m invested in 2009.

Overseas Investors are re-awakening their interest in the Polish property market. With such a buoyant economy, compared with many other European countries, Poland represents a good investment opportunity. Property investors, seeking capital growth and promising rental prospects should think about Poland. As international employers seek to bring subsidiaries to Poland and recruit more people in city centres and special economic zones, like Krakow and Łodz, demand for property rises.

Author: Louise Reynolds, posted 19th August, '10

Property Venture^® is an independent, UK-based agent. We help time-strapped investors and holiday home purchasers, buy abroad by guiding through the buying process, so reducing the hassle. We visit the countries you buy in, so we can offer common-sense, grounded advice. Overseas members of NAEA. This means we have been subjected to the membership criteria and have signed up to follow the professional Code of Conduct established to help you, the potential buyer or investor, buy property with confidence

Source: * IMF report, World Economic Outlook Update. Restoring Confidence Without Harming Recovery, ** Puls Biznesu based on the GDDKiA data, PMR, FT, BizPoland, The Times.