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ISA January 2014 Country Report Poland. Poland ’ s history has been heavily influenced by its geographical position between Germany and Russia.
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Poland’s history has been heavily influenced by its geographical position between Germany and Russia. Poland is easily the largest of the countries that entered the European Union in 2004, with a population more than the other nine new members combined. Poland balances close ties with the United States, who it sees as a guarantee of the country’s security, and the European Union with whom it has close economic ties. Poland’s economy has bounced back in recent years as foreign investment pours into the country. Poland continues to have one of the highest unemployment rates in Central Europe, but unemployment is beginning to fall rapidly. Poland: Key Facts Overview: Key Facts and Data: • Official Name • Republic of Poland • Capital • Warsaw • Government Type • Republic • Head of State • President Bronislaw Komorowski (since 2010) • Head of Government • Prime Minister Donald Tusk (since 2007) • Population • 38,415,000 • Land Area • 304;465 sq. km • Total GDP (US$) • $489.8 billion • Per Capita GDP at PPP (US$) • $20,920 • Currency • Polish zloty
Recent Political Events Recent Economic Events Other Recent Events Table of Contents Current Events: Economic Outlook: • Economic Overview • GDP Growth Forecasts • Key Sector Forecasts • Inflation Forecasts • Foreign Trade Forecasts • Foreign Investment Forecasts • Exchange Rate Forecasts • Outlook for Key Sector • Key Economic Issue • Economic Risk Outlook Political Outlook: • Overview of the Current Government • Leadership Profile • Summary of the Most Recent Elections • Leading Party #1 • Leading Party #2 • Leading Party #3 • Leading Party #4 • Forecast for the Next Elections • International Relations Outlook • Potential Conflict #1 • Potential Conflict #2 • Military Capabilities • Key Political Issue • Political Risk Outlook Demographic & Environmental Outlook: • Population Overview • Population Characteristics • Development of Leading Urban Centers • Key Demographic Issue • Topography and Climate Overview • Environmental Threat Summary • Key Environmental Issue • Demographic and Environmental Risk Outlook
Poland: Recent Political Events and Changes • The ruling Civic Platform’s support levels fell in polls taken in recent months. Some polls placed the opposition Law and Justice party ahead of the Civic Platform for the first time in recent years. • In November 2013, Prime Minister Tusk made a major cabinet reshuffle in order to boost his government’s falling support levels. The biggest change was the replacement of Finance Minister Jacek Rostowski with Mateusz Szczurek. • The leftist SLD party indicated that it could form a coalition government with the Civic Platform following the country’s next election in order to keep the Law and Justice party from gaining power. • A major clash over the government’s plan to overhaul the country’s pension system by transferring privately-held parts of the system to the state led to major divisions within the government and among many of its supporters. Nevertheless, this overhaul was approved by the government in November 2013. • The government criticized Russian plans to deploy nuclear-capable missiles in its Kaliningrad enclave that borders northeastern Poland. Key Political Events and Changes:
GDP growth in Poland accelerated to 1.7% on an annualized basis in the third quarter of 2013 and the outlook for the coming months continued to improve as domestic demand rebounded from its earlier slump. Industrial production growth remained solid in the latter part of 2013, helping to boost the economy. Poland’s inflation rate fell to just 0.5% year-on-year in November 2013. Prime Minister Tusk announced that he would no longer oppose a referendum on the adoption of the euro in Poland. Poland’s unemployment rate held steady at 10.2% in October 2013. Poland: Recent Economic Events and Changes Key Economic Events and Changes: Economic Highlight: Source: OANDA
Poland: Other Recent Events and Changes • Prime Minister Tusk announced that Poland would not cut coal output in order to cut the country’s level of carbon emissions. • This year’s United Nations summit on climate change took place in Poland in late 2013. Other Key Events and Changes:
President Lech Kaczynski was killed in a plane crash in Russia in April 2010, along with most of the heads of the country’s armed forces. He was replaced in office on an interim basis by the speaker of the parliament, Bronislaw Komorowski, who won 2010’s presidential election. The center-right coalition government was re-elected in October 2011, with most of the government’s highest-profile leaders maintaining their positions. In April 2013, Prime Minister Tusk sacked Justice Minister Jaroslaw Gowin after he accused German scientists of probably importing Polish embryos to use in scientific experiments. In April 2013, Treasury Minister Mikolaj Budzanowski was sacked due to his mismanagement of a pipeline deal with Russia’s gas giant Gazprom. In November 2013, Prime Minister Tusk made a major cabinet reshuffle in order to boost his government’s falling support levels. The biggest change was the replacement of Finance Minister Jacek Rostowski with Mateusz Szczurek. Poland: Current Government Overview: Key Members of the Government: • Head of State • President Bronislaw Komorowski • Head of Government • Prime Minister Donald Tusk • Minister of Foreign Affairs • Radoslaw Sikorski • Minister of Finance • Mateusz Szczurek • Minister of Economy • Waldemar Pawlak • Minister of the Interior • Jacek Cichocki • Minister of Justice • Marek Biernacki • Minister of Defense • Tomasz Siemoniak • Minister of the Treasury • Wlodzimierz Karpinski • Minister of Agriculture • Marek Sawicki
Profile of Prime Minister Donald Tusk Donald Tusk became prime minister of Poland following the victory of his Civic Platform party in 2007’s parliamentary elections. • He led the Civic Platform to another victory in 2011’s parliamentary elections, where the party won a majority of seats in the parliament. • In winning 2011’s parliamentary elections, he became the first prime minister in post-Communist Poland to win re-election. Prime Minister Tusk first entered politics in the late 1970s and early 1980s when he became a leader of the youth wing of the Solidarity movement in his hometown of Gdansk. • After the fall of communism in Poland, he was one of the founders of the free market Liberal Democratic Congress and he entered parliament in 1991. • In 2001, Prime Minister Tusk and some of his allies founded the Civic Platform party and became the leader of the party in 2003. • In 2005, he was defeated in the second round of the country’s presidential election by Lech Kaczynski. Since gaining power, Prime Minister Tusk has advocated free market reforms for Poland that included lower taxes and incentives for foreign investors in Poland. • In terms of foreign affairs, Prime Minister Tusk has continued with his predecessors of strengthening ties with both Poland’s European neighbors and with the United States. Background:
Poland’s center-right government won re-election in October 2011’s parliamentary elections, becoming the first government to win a second consecutive term in office in Poland since the fall of Communism in 1989. Under the leadership of Prime Minister Donald Tusk, Poland’s center-right government has remained very popular in recent years as the Polish economy has outperformed nearly all of its European counterparts. As expected, Prime Minister Tusk’s Civic Platform party won a solid victory in 2011’s parliamentary elections, winning 39.2% of the vote and 206 of the 460 seats in the lower house of the Polish parliament. Meanwhile, the Civic Platform’s junior coalition party, the agrarian Polish People’s Party, finished in fourth place with 8.4% of the vote and 30 seats in the parliament. The country’s main opposition party, the conservative Law and Justice party, finished in second place with 29.9% of the vote and 157 seats. The biggest surprise in the election was the emergence of the anti-clerical Palikot’s Movement party that was the best performer on Poland’s political left, winning 10.2% of the vote and 40 seats in the parliament. Poland: Most Recent ElectionsParliamentary Elections – October 2011 Summary of the Last Elections: Results: Source: Polish election authority
The Civic Platform first swept to power following their massive victory in the 2007 parliamentary elections. The party has been contesting the leadership of the political right in Poland with the Law and Justice in recent years. Under the leadership of Donald Tusk, the party has soared to new heights in terms of popularity, winning re-election by a wide margin in 2011. Poland’s Leading Political Forces:Civic Platform (PO) History: Source: Polish election authority Key Policies and Stances: • The PO is one of the only right-leaning parties in Poland to be staunchly pro-European Union. • In terms of economic, the party supports promoting foreign investment and has flirted with the idea of a flat tax for Poland. • The Civic Platform has taken a strong stance against corruption in Polish government. Outlook: • The Civic Platform’s surge in popularity has been the result of its ability to fight corruption while promising major economic improvements in Poland. • If the Civic Platform-led government fails to bring more economic growth or to effectively deal with corruption, it could follow in the footsteps of previous leading parties and see a quick loss of support.
Despite winning its largest-ever share of the vote, the Law and Justice party was swept from power in the 2007 parliamentary elections. Nevertheless, the Kaczynski brothers, the leaders of the party, remained extremely influential, with Lech Kaczynski serving as the country’s president until his death in 2010. Poland’s Leading Political Forces:Law and Justice (PiS) History: Source: Polish election authority Key Policies and Stances: • The party’s main platform is promising tough new measures to tackle the rising crime problem in Poland. • The party was in favor of European Union membership, but has deep reservations about further EU integration. • The party favors economic reforms for Poland, although not to the degree of their right-wing allies. • The party supports a number of socially conservative platforms. Outlook: • Many see Law and Justice as the true heirs to Solidarity’s leadership of Poland’s Right. • With a centrist program and a popular anti-crime stance, Law and Justice appeals to mainstream Poles in a way that more right-wing parties cannot emulate. • Moreover, if the Civic Platform stumbles while in power, Law and Justice could takeover the leadership of the political right.
Palikot’s Movement was founded by Janusz Palikot, a former high-ranking member of the Civic Platform after he resigned from that party in 2010. In its first national election in 2011, the party won ten percent of the vote to become the third largest party in the parliament. Poland’s Leading Political Forces:Palikot’s Movement (RP) History: Source: Polish election authority Key Policies and Stances: • Palikot’s Movement is best-know for its support for the withdrawal of the Roman Catholic Church from public life in Poland. • In fact, the party is easily the most socially liberal party in Poland. • The party supports the implementation of a flat tax. Outlook: • It remains to be seen if the party can build on its success in the 2011 elections of if it will gradually fade away. • With the political left in Poland remaining in disarray, Palikot’s Movement has an opportunity to consolidate its new-found leadership position on the left.
The PSL has finished in fourth place in the past two national elections. With the demise of some smaller right-wing parties in recent years, the People’s Party has been able to be the junior member of the governing coalition since 2007. Poland’s Leading Political Forces:Polish People's Party (PSL) History: Source: Polish election authority Key Policies and Stances: • The party continues to support protectionist economic policies. • The PSL is being forced into a more populist stance due to the success of the rural right-wing parties. • The support of Poland’s huge rural population remains the hallmark of the party. Outlook: • By forcing a split with the Democratic Left, the PSL has acknowledged the growing popularity of the right-wing parties among its rural voting base. • Whether or not the PSL will be successful in moderating their rural voters or if the party itself will become more populist remains to be seen.
The Democratic Left Alliance was swept from power in the 2005 parliamentary elections. The party split over infrastructure development and EU membership while in power. Since being swept from power in 2005, the SLD has suffered two further election defeats in 2007 and 2011. Poland’s Leading Political Forces:Democratic Left Alliance (SLD) History: Source: Polish election authority Key Policies and Stances: • The SLD favors strengthening ties with the West through cooperation in the EU and NATO. • It favors a generally free-market approach to Polish economics. • Consolidating Poland’s leftist-parties has resulted in the SLD moving more towards the center. Outlook: • The party’s success in consolidating various political groupings left it as the dominant force on Poland’s political left. • However, the party is in danger of completely dissolving following its crushing defeats in the last three elections and the emergence of the center-left Palikot’s Movement.
Poland: International Relations Outlook Key International Disputes: • Large areas of western Poland once contained a sizeable German population and belonged to Germany until 1945. Both sides have demanded reparations for damages during the Second World War. • Poland and the Czech Republic have in the past disputed control over a couple of small areas along their border. • Western areas of Belarus and Ukraine once belonged to Poland and still have ties with Poland. International Relations Outlook: • Poland will maintain close political ties with the United States as security issues will continue to play a large role in determining Polish foreign policy. • Nevertheless, Poland will continue to cultivate ties with the European Union, while serving as a bridge between the EU and the US.
Potential Conflict: Russia Main Disputes: • Poles still fear Russian intentions in Central Europe. • The unclear future of Russia’s Kaliningrad region is a source of instability • A union between Russia and Belarus would extend Poland’s border with a new “Russia”. • Poland’s wholehearted embrace of NATO is mainly in response to the perceived threat from Russia. Best- and Worse-Case Scenarios: • Best Case Scenario • A stable Russia that moves to cultivate strong ties with the EU and NATO would ease Polish fears of future Russian aggression. • Worst-Case Scenario • Russian moves to regain influences to its west would stoke Polish fears of future Russian aggression.
Potential Conflict: Germany Main Disputes: • The descendants of Germans forced out of western Poland are seeking compensation for their losses. • Following the Second World War, Poland was shifted westwards and former German areas were incorporated into Poland • Poland fears that Germans will buy cheap Polish land in former German areas in an attempt to regain control there. Best- and Worse-Case Scenarios: • Best Case Scenario • Poland’s EU membership leads to a further normalization of relations between the two neighbors. • Worst-Case Scenario • Calls for reparations from both sides lead to a serious deterioration in relations between Germany and Poland.
Military Spending Strengths and Weaknesses • Poland’s military was easily the largest of the Central European countries that joined NATO in the main wave of Central European members into NATO. • Poland was a leading contributor in the US-led wars in Iraq and Afghanistan. • Poland and the United States have developed very close military ties in recent years. • Poland’s military continues to undergo a major modernization program. • Polish military spending equals that of the rest of Central Europe combined. • The number of Polish troops has been reduced to below 200,000, down from the more than 400,000 active troops that Poland had in the 1980s. Source: SIPRI Outlook • Poland’s military capabilities, combined with its potential, have made it a key ally of the United States in Europe. • Meanwhile, despite the improved political climate in Central Europe, many Polish people remain wary of Russia and Germany, hence the desire for close defence ties with the United States.
Poland’s political risk levels have receded in recent years as the domestic political climate has moderated and as regional tensions have faded. Poland: Political Risk Outlook Current Political Risk Ratings: Political Risk Outlook: Low Risk………………High Risk • ISA Risk Ratings • 0.0 to 1.9 = Low Risk • 2.0 to 3.9 = Low to Moderate Risk • 4.0 to 5.9 = Moderate Risk • 6.0 to 7.9 = Moderate to High Risk • 8.0 to 10 = High Risk
After years over solid growth following Poland’s “shock therapy” years, the economy was stuck in a period of stagnation. Poland had the slowest economic growth in Central Europe between 2001 and early 2003. However, growth has returned in recent years and Poland has outperformed nearly all other European economies in recent years. Poland should be the jewel of Central Europe in terms of attracting foreign investment that is needed to spur economic growth. After a long period of under-performing, Poland has become a leading recipient of foreign investment, thanks in large part to the country’s large domestic market. Heavy industry and agriculture are the traditional pillars of the Polish economy. However, both sectors have struggled over the past two decades. Today, it is Poland’s service sector that is realizing the most growth, thanks to rising demand levels on the domestic market in Poland. Poland: Economic Overview Economic Summary: Economic Performance Comparisons: Size of the circle indicates the size of the economy Avg. Annual GDP Growth 2008-2012 Source: ISA Economic Forecasts Per Capita GDP at PPP
Poland: Wealth Comparisons Per Capita GDP at PPP (US$) Key Wealth-Related Issues and Trends Poland has steadily closed the gap with the wealthier countries of Central Europe. Moreover, per capita GDP levels have surpassed those of emerging markets in other regions. Solid GDP growth, coupled with a lack of population growth, will lead to more increases in wealth levels. Source: World Bank Poland has the potential to become one of Europe’s most important markets, and if GDP growth can beat expectations, this will become a reality in the coming decades. In the meantime, Poland’s market potential remains constrained by relatively low levels of purchasing power.
Keys to Economic Growth in Poland Key Factors Improvements in Poland’s Poor Infrastructure Poland’s economic performance has improved greatly in recent years, with Poland outgrowing most other European economies. More Success at Attracting Foreign Investment The Pace of Economic Reform, Including a Modernization of Polish Heavy Industry Domestic Spending Poland’s economy will continue to realize solid, but not spectacular, economic growth over the forecast period. If Poland could further develop its export industries, then economic growth would improve. Moreover, Polish consumers, with more purchasing power, can be a major force for economic growth as well.
Poland’s economy has withstood the European economic crisis better than most of its neighbors thanks to resilient levels of demand inside Poland. However, growth slowed in 2012 and 2013 as Europe’s crisis spread northwards. Poland: GDP Growth Outlook Chart: GDP Growth Rates Current Outlook: Future Outlook: • GDP growth will rebound over the near-term as domestic and export demand both rise at a faster pace. • Stronger growth will return later in the forecast period, although the growth rates of the pre-crisis period are unlikely to be reached at any point in the coming years. Source: ISA Economic Forecasts, national statistics
Poland had to restructure its mining industry as it prepared for EU membership. Tens of thousands of jobs were lost in the process. Nearly 130,000 people are still employed in Poland’s mines, down from 420,000 during the communist era. Miners in Poland have a long history of militancy. Poland needs to spend huge sums of money to retrain miners for new jobs. Money is also needed to solve the environmental issues surrounding the mines. Poland: Key Economic SectorThe Mining Industry Summary: Outlook: Source: EIA, BP • Poland’s huge mining sector is proving to be a massive burden for the country’s economy and is not attracting the levels of foreign investment that were hoped for. • With unemployment already painfully high, additional restructuring is likely to be resisted by much of Poland’s mining workforce.
Poland’s once-booming automotive industry has suffered a series of setbacks in recent years. Poland has suffered from inconsistent performances by the major foreign investors in the country’s automotive industry. In addition, major foreign investments have gone to other Central European countries as many of the world’s leading carmakers have chosen to build car factories elsewhere in the region. However, the country’s industry has benefitted from the strong growth on the domestic automotive market in recent years. Poland: Key Economic SectorThe Automotive Industry Summary: Outlook: • The Polish car market should begin to rebound in the coming years after a number of difficult years. • Nevertheless, the threat posed by the collapse of much of the industry in Europe poses many challenge for the automotive sector in Poland. • As for the industry, the government must do a better job if it hopes to attract future investments. Source: OICA
Most of Poland’s 2.5 million registered farmers work on small plots of land. Collectivization was not implemented in Poland as it was in other former Communist states after the Second World War. Despite having one-third of Polish employees, agriculture accounts for only five percent of Polish economic output. It is among Europe’s most unproductive agricultural systems. Poland: Key Economic SectorAgriculture Summary: Outlook: • Poland’s agriculture is about to undergo a massive change. • With foreign investment set to modernize Poland’s farmlands, current Polish farmers will have to adjust to the new realities. • Moreover, access to the European market is providing the potential for long-term growth. Source: National Accounts
Industrial production slipped in recent years as export demand slackened. Earlier growth had been driven by manufactured exports, with domestic demand starting to grow as well. Poland: Industrial Production Growth Outlook Chart: Industrial Production Growth Rates Current Outlook: Future Outlook: • Industrial production growth will be weak over the near-term due to relatively low levels of export demand. • Moreover, without a significant pick-up in foreign investment in the manufacturing sector, long-term industrial production growth will be limited. Source: ISA Economic Forecasts, national statistics
Inflationary pressures have been rather high in recent years, pushed upwards by high levels of demand and higher energy prices. Inflation rates began to fall in 2013, falling to their lowest levels since 2006. Poland: Inflation Outlook Chart: Inflation Rates Current Outlook: Future Outlook: • Inflationary rates will remain relatively subdued over the course of the forecast period. • Moreover, Poland will be better insulated from the threat of external price pressures than most other countries in the region. Source: ISA Economic Forecasts, national statistics
Poland: Foreign Trade Overview Chart: Leading Trade Partners Chart: Current Account Balance Source: ISA Economic Forecasts, national statistics Poland was expected to become a major exporter of manufactured and agricultural products following the opening of the country to foreign investment. Unfortunately, Poland has seen this distinction go to its neighbors to the south. The result is a current account deficit that is likely to grow as the economy continues to expand.
Poland had lagged behind other Central European countries in terms of per capita foreign investment until recent years. Poor labor relations and a lack of investment incentives from the government had hurt Poland’s attractiveness to foreign investors, not to mention the country’s poor infrastructure. Nevertheless, foreign investment in Poland had grown the years before the recent economic crisis. Poland’s population is four times larger than any other Central European country, giving it a sizeable domestic market. Its location provides it with access to northern and western Europe. Poland: Foreign Investment Chart: FDI Inflows Foreign Investment Climate: Source: UNCTAD Outlook For Future Foreign Investment: • The attractiveness of Poland’s domestic market has been a key catalyst for the recent growth in foreign investment in Poland. • Moreover, Poland has the potential to realize more foreign investment growth in the wake of the recent economic downturn thanks to the relative stability of the local economy.
Regional Foreign Investment Source: UNCTAD Per Capita FDI inflows in Central and East Europe are among the highest in the world as manufacturers continue to invest heavily across the region. While countries in Central Europe are unlikely to realize major increases in foreign investment, some countries in other areas of the region have much room for growth.
Poland: Foreign Investment by Sector and Investors Chart: Leading Foreign Investors Chart: Foreign Investment by Country France’s large investments in Poland’s telecoms and retail sectors have made that country the single largest investor in the Polish economy in recent years. Meanwhile, some foreign investors are fearful that the current right-wing, populist government could drive away foreign investment from strategic sectors of the economy.
Poland: Exchange Rates Chart: Exchange Rate with the US Dollar Chart: Exchange Rate with the Euro Source: ISA Economic Forecasts, OANDA Source: ISA Economic Forecasts, OANDA The relative strength of the zloty had worried Polish exporters, who despaired over the strength of the zloty against other major currencies in recent years. Nevertheless, a strengthening of the Polish economy holds the possibility of further appreciation periods before Poland eventually adopts the euro.
Cost of Living Comparisons Regional Cost of Living Comparisons Global Cost of Living Comparisons Source: US State Department Source: US State Department Cost of living levels in Warsaw have grown much faster than those in most other areas of the country and are today among the highest in Central Europe. Elsewhere, cost of living levels have remained fairly low, particularly in comparison with provincial cities in West Europe.
Poland’s consumer market has undergone a massive transformation over the past two decades. Nevertheless, purchasing power levels remain well behind those of West Europe and have fallen behind many areas of Central Europe as well, inhibiting the growth of the domestic consumer market. Poland: Domestic Consumer Market Outlook Consumer Market Overview: Consumer Market in the Region: Consumer Attitudes: Polish consumers have embraced a wide range of new consumer goods and services in recent years, although consumers in rural areas remain generally conservative. Domestic Consumption Patterns and Trends: The consumer market in Poland has grown significantly in recent years, but this growth has been uneven as some areas have grown far faster than others. Domestic Consumer Market Outlook: Poland’s consumer market is expected to grow at a steady pace in the coming years as wage levels continue to rise. Source: Eurostat
Poland’s fiscal deficit rose sharply between 2007 and 2010 as the government did little to cut spending despite lower levels of government revenues. However, recent austerity measures have reduced the budget deficit, although it remains in excess of 3% of GDP. Fiscal Policy Overview Chart: Fiscal Balance Current Outlook: Future Outlook: • The fiscal deficit will fall over the coming years as the government does more to curb spending levels. Source: ISA Economic Forecasts, national statistics
Poland’s high unemployment remains one of the most serious economic issues facing Poland today. Some areas of Poland have unemployment rates above 15%, although other areas of the country have seen a sharp decline in unemployment over the past few years. South-western and northern areas of Poland have the most severe unemployment problems. Poland’s work force is highly skilled and well educated. Productivity rates have been rising steadily, but still trail those of West Europe. Strikes and industrial actions remain above the European average. Poland: Labor Force Chart: Unemployment Rate Labor Force Overview: Source: ISA Economic Forecasts, national statistics Outlook For the Labor Force: • Poland’s unemployment rate has fallen from its highs during the previous decade as economic growth remains strong and the workforce shrinks. • Despite the decline in unemployment, many Poles will remain without work, but many sectors of the economy are beginning to experience labor shortages.
Poland Regional Economies As the largest country in East-Central Europe, Poland has a number of diverse economic regions. While a few areas such as Warsaw, Poznan and Krakow have seen economic expansion in recent years, areas where traditional industries predominate, such as Silesia and the Baltic Coast have suffered from a lack of investment. The primeval forests of north-eastern Poland hold significant tourist potential. The three coastal cities of Gdansk, Gdynia and Sopot are Poland’s shipping industry hub. The area around Warsaw remains the focal point of foreign investment. The Silesian region is Poland’s leading heavy industry and mining center.
Key Infrastructure Issue in PolandPoland’s Appalling Road Network Proposed Polish Highway Network • Poland has one of the worst road networks in all of Central Europe. • Whereas the Hungarians and the Czechs have built large highway networks over the past two decades, Poland’s network is limited to a few relatively short highways at present. • Investment in Poland’s road network has been held back by a number of factors. • Small landowners often refuse to sell their land to the government. • Foreign investors are leery of East European road-building projects which relay upon tolls. • The Polish government has been unable to come up with the promised funds. The longer it takes for Poland to modernize its transport infrastructure, the longer it will take for the country to adequately compete for new foreign investment into the region. Until then, drivers trying to cross the country will continue to be frustrated.
Forecast Assumptions and Risk Assumptions: Risks: Export Demand Will Continue to Recover Export demand will continue their recovery in North America and Asia. Moreover, depressed export markets in Europe and Latin America will begin to rebound in the coming months. Deflationary Pressures in Developed Economies A number of developed economies in Europe and Asia will face high levels of deflationary pressures that will persist over the longer-term in many of these regions’ weaker economies. Natural Resource Prices Will Hold Steady The price of oil and many other natural resources will remain near current levels over the near-term as supply constraints ease and demand growth remains manageable. A Meltdown in the Middle East The potential for the level of political unrest in the Middle East and North Africa to become much worse is very high as conflicts of varying intensities wage across the region. Less Currency Fluctuations After a period of major currency fluctuations, particularly in emerging markets, the next months will see a stabilization of most major exchange rates. Rollback of Economic Reforms Political forces in favor of rolling back some economic reforms continue to enjoy support in Poland and, if they can gain more influence, could harm Poland’s international competitiveness. The Polish Domestic Markets Strengthens We expect the Polish domestic market to develop into one of the key markets in Europe in the coming years. Labor Shortages In a short period of time, Poland has gone from facing huge unemployment problems to potential labor shortages thanks to Poland’s fast-growing economy and exodus of workers to western Europe.
Poland’s economic risk levels have fallen in recent years, despite the fact that much of Europe has been in an economic crisis. Poland’s expanding domestic market has been a key to the fact that the country’s economic risks are as low as they are know. Poland: Economic Risk Outlook Current Economic Risk Ratings: Economic Risk Outlook: Low Risk………………High Risk • ISA Risk Ratings • 0.0 to 1.9 = Low Risk • 2.0 to 3.9 = Low to Moderate Risk • 4.0 to 5.9 = Moderate Risk • 6.0 to 7.9 = Moderate to High Risk • 8.0 to 10 = High Risk
Poland: Population Overview Chart: Total Population Chart: Working-Age Population Source: US Census Bureau Source: US Census Bureau Poland’s workforce is forecast to decline in the coming decades, like in most of its neighboring countries. As a country which receives relatively little immigration, this is an alarming situation for Poland’s developing economy and could lead to labor shortages in some areas of the economy.
Population Growth By Ten-Year Age Increments Source: US Census Bureau Poland’s declining birth rate and aging population will lead to major changes for Polish society. Within 20 years, one-third of Poland’s population will be more than 60 years old.
Composition of Poland’s Population • Following the westward shift of Poland’s borders in 1945, and the mass migrations that followed, Poland has become ethnically homogenous. • Much of Poland’s western areas once contained a large German population. • Likewise, many Poles lived in what is today Belarus, Ukraine and Lithuania. • Polish is the official language of the country. • The small ethnic minorities continue to speak their own language. • Many Poles can speak English, German or Russian. • The Roman Catholic Church exerts a great deal of influence over Poland. • It is a focus of Polish nationalism and conservatism and the church is very involved in Polish politics. • The fact that former Pope John Paul II was a Pole has greatly enhanced the church’s position in Poland.
East Europe Population Trends by Country Source: US Census Bureau Source: US Census Bureau No region in the world is experiencing the level of population decline as East Europe. Russia and Ukraine alone will see their collective populations decline by nearly 30 million people by 2050. This will have a major impact upon the economies and social structures in the region.
The industry-rich Silesian region, centered around Katowice, contains Poland’s largest population concentration. However, Warsaw remains the administrative and commercial heart of the country, while Krakow has retained its position as the leading cultural center of Poland. Poland: Leading Urban Centers Chart: Largest Urban Centers Summary: Source: World Gazetteer
