Poland: A solid economy with nearshoring opportunities
|Poland’s economy has generally shown resilience during periods of turbulence since the financial crisis of 2008-2009. For instance, in 2009, the country was able to avoid a recession in contrast to neighbouring countries. Since 2020, successive shocks have constrained GDP growth momentum, but strong fiscal buffers enabled the authorities to implement generous supportive measures. The country remains amongst the best performing economies in the region in the early months of 2024, with its GDP above 11% in Q12024 compared to its pre-COVID levels. Overall, the country reinforced its position in Europe, judging from the increase of Poland’s economic weight in the EU (measured by GDP in purchasing power parity) and gains in market share. Since its entry in the European Union in 2004, Poland has seen its GDP per capita in volume more than double within 20 years. Such performance was facilitated by substantial EU funds in favour of Poland. The country remains an attractive destination in terms of nearshoring opportunities in the short and medium term. The deterioration in fiscal accounts and the longstanding issue of CHF loans are the key weaknesses but are not as acute and should not jeopardise the country’s strong fiscal and banking metrics.
Political change and normalisation of the relationship with EU
The last parliamentary elections, on 15 October 2023, brought a shift in the political landscape and led to a normalisation of Poland’s relationship with EU institutions. The outgoing government, affiliated with the PiS party, obtained the most votes (35.4% of votes) but was not able to secure a majority via a coalition with other parties. Donald Tusk’s Civic platform, alongside with its coalition with two other parties - Third Way and The Left - obtained 53.7% of the votes (Civic Platform: 30.7%; Third Way: 14.4% and The Left: 8.6%). In Parliament, the three-party coalition represents 248 seats out of a total of 460.
Following a two-month post-electoral process, Donald Tusk’s administration was officially sworn in office in December 2023. One key hurdle for the government concerns the absence of a super majority (60% of votes) in Parliament, meaning that the government’s decisions may be subject to President Duda’s potential veto. Policymaking may be complicated for another year with the next presidential elections to be held in 2025. For example, the approval of the budget in early January was not a smooth process.
The 100 policies outlined in Tusk’s election campaign, targeted to be implemented in his first 100 days in power, is taking longer than initially anticipated. The 100 policies earmarked in the government’s agenda include the release of EU funds, reforms of the judicial system and in state media and a higher threshold for tax-free income.
While the target is far from being achieved, there are nonetheless some key developments. EU funds, worth EUR 75.5 bn under the 2021-2027 budget and EUR 59.8 bn under the National Recovery and Resilience Plan (EUR 25.3 bn in grants and EUR 34.5 bn in loans) were rapidly unlocked. As a reminder, in April 2022, EU funds were frozen by the European Commission due to concerns related to rule of law and judicial independence. At the end of May, the European Commission announced its intention to end the legal process related to the rule of law pursuant to Article 7 on the basis of the government’s commitment to pursue ongoing and future reforms.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.