Economy of Poland

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Economy of Poland

Currency	1 zloty (PLN) = 100 groszy
Fiscal year	Calendar year
Trade organisations	EU, WTO and OECD
Statistics
GDP ranking	24th (2005)
GDP	$495.9bn (2005)
GDP growth	8% (Q1 2007 est.)
GDP per capita	$14,400 (2006 est.)
GDP by sector	agriculture (2.8%), industry (31.7%), services (65.5%) (2005 est.)
Inflation	1.2% (Oct.2006)
Pop below poverty line	17% (2003 est.)
Labour force	20.1 million (2005 est.)
Labour force by occupation	agriculture (16.1%), industry (29%), services (54.9%) (2002)
Unemployment	11.8% (February 2007)[1]
Main industries	machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages, textiles
Trading partners
Exports	$92.72 billion f.o.b. (2005 est.)
Main partners	Germany 30%, Italy 6.1%, France 6%, UK 5.4%, Czech Republic 4.3% (2004)
Imports	$95.67 billion f.o.b. (2005 est.)
Main partners	Germany 24.4%, Italy 7.9%, Russia 7.3%, France 6.7%, China 4.6% (2003)
Public finances
Public debt	$231.44 billion (47.3% of GDP) (2005 est.)
Revenues	$52.73 billion (2005 est.)
Expenses	$63.22 billion (2005 est.)
Economic aid	$13.9 billion in available EU structural adjustment and cohesion funds (2004-06)
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Poland has steadfastly pursued a policy of economic liberalization throughout the 1990s with mixed results. The privatization of small and medium state-owned companies and a liberal law on establishing new firms has encouraged the development of the private business sector, which has been the main drive for Poland's economic growth. The agricultural sector remains handicapped however by structural problems, surplus labor, inefficient small farms, and a lack of investment. Restructuring and privatization of "sensitive sectors" (e.g., coal), has also been slow, but recent foreign investments in energy and steel have begun to turn the tide. Recent reforms in health care, education, the pension system, and state administration have resulted in larger than expected fiscal pressures. Improving this account deficit and tightening monetary policy, with focus on inflation, are priorities for the Polish government. Further progress in public finance depends mainly on privatization of Poland's remaining state sectors, the reduction of state employment, and an overhaul of the tax code to incorporate farmers, who currently pay significantly lower taxes than other people with similar income levels.

1 Agriculture
2 Industry
3 Economic reform program
4 Foreign trade
5 Foreign business in Poland
6 Major Polish companies
7 Other statistics
8 History
9 Growth
10 See also
11 References

[edit] Agriculture

Agriculture employs 27.5% of the work force but contributes only 3.8% to the gross domestic product (GDP), reflecting relatively low productivity. Unlike the industrial sector, Poland's agricultural sector remained largely in private hands during the decades of communist rule. Most of the former state farms are now leased to farmer tenants. Lack of credit is hampering efforts to sell former state farmland. Currently, Poland's 2 million private farms occupy 90% of all farmland and account for roughly the same percentage of total agricultural production. These farms are small—8 hectares on average—and often fragmented. Farms with an area exceeding 15 ha accounted for only 9% of the total number of farms but cover 45% of total agricultural area. Over half of all farming households in Poland produce only for their own needs with little, if any, commercial sales.

Poland is a net exporter of confectionery, processed fruit and vegetables, meat, and dairy products. Processors often rely on imports to supplement domestic supplies of wheat, feed grains, vegetable oil, and protein meals, which are generally insufficient to meet domestic demand. However, Poland is the leading producer in Europe of potatoes and rye and is one of the world's largest producers of sugar beets. Poland also is a significant producer of rapeseed, grains, hogs, and cattle. Attempts to increase domestic feed grain production are hampered by the short growing season, poor soil, and the small size of farms.

[edit] Industry

Before World War II, Poland's industrial base was concentrated in the coal, textile, chemical, machinery, iron, and steel sectors. Today it extends to fertilizers, petrochemicals, machine tools, electrical machinery, electronics, cars and shipbuilding.

Poland's industrial base suffered greatly during World War II, and many resources were directed toward reconstruction. The communist economic system imposed in the late 1940s created large and unwieldy economic structures operated under a tight central command. In part because of this systemic rigidity, the economy performed poorly even in comparison with other economies in central Europe.

In 1990, the Mazowiecki government began a comprehensive reform program to replace the centralized command economy with a market-oriented system. While the results overall have been impressive, many large state-owned industrial enterprises, particularly the railroad and the mining, steel, and defense sectors, have remained resistant to the change and downsizing required to survive in a market-based economy.

[edit] Economic reform program

The economic reforms of the Balcerowicz plan introduced in 1990 removed price controls, eliminated most subsidies to industry, opened markets to international competition, and imposed strict budgetary and monetary discipline. Poland was the first former centrally planned economy in central Europe to end its recession and return to growth in the early 1990s. Since 1992, the Polish economy has enjoyed an accelerated recovery, although growth has recently slowed. The private sector now accounts for over two-thirds of the GDP.

As a result of Poland's growth and investment-friendly climate, the country has received over $50 billion in direct foreign investment since 1990. However, the government continues to play a strong role in the economy, as seen in excessive red tape and the high level of politicization in many business decisions. Investors complain that state regulation is not transparent or predictable; the economy suffers from a lack of competition in many sectors, notably telecommunications. In early 2002, the government announced a new set of economic reforms, designed in many ways to complete the process launched in 1990. The package acknowledges the need to improve Poland's investment climate, particularly the conditions for small and medium-sized enterprises, and better prepare the economy to compete as a member of the European Union. The government also aims to improve Poland's public finances to prepare for adoption of the Euro (planned 2009).

[edit] Foreign trade

With the collapse of the ruble-based COMECON trading bloc in 1990, Poland scrambled to reorient its trade. As early as 1996, 70% of its trade was with EU members, and neighboring Germany today is Poland's dominant trading partner. Poland joined the EU in May 2004. Before that, it fostered regional integration and trade through the Central European Free Trade Agreement (CEFTA), which included Hungary, the Czech Republic, Slovakia and Slovenia.

Most of Poland's imports are capital goods needed for industrial retooling and for manufacturing inputs, rather than imports for consumption. Therefore, a deficit is expected and should even be regarded as positive at this point. Poland is a member of the World Trade Organization and the European Union. It applies the EU's common external tariff to goods from other countries (including the U.S.). Most Polish exports to the U.S. receive tariff benefits under the Generalized System of Preferences (GSP) program.

Opportunities for trade and investment continue to exist across virtually all sectors. The American Chamber of Commerce in Poland, founded in 1991 with seven members, now has more than 300 members. Strong economic growth potential, a large domestic market, EU membership, and a high level of political stability are the top reasons U.S. and other foreign companies do business in Poland.

[edit] Foreign business in Poland

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The Polish tax system is perceived by many potential foreign investors to be a significant problem. The tax laws themselves are extensive and enforced by a large bureaucracy which at times is hindered by corruption. Crime is another factor which often makes foreign investors hesitant to come to Poland. Recently, there has been a general rise in crime, but at the same time it has become increasingly difficult for the government to prosecute many criminals. Especially pertinent to business, the largest increase in crime was related to theft of property.

Since World War II, Poland has been ethnically homogeneous. 96.7% of the people say they have Polish nationality. Furthermore, they share common religious beliefs; around 95% are practicing Catholics.

In the past decade, Poland has seen many foreigners start businesses and control industries. For example, 70% of the banking sector is owned by foreigners. Because of this, there has been somewhat of a backlash and some Polish businesses prefer to do business only with other Poles.

Polish employment is also a concern because of inflexible employment laws which are at times seen to favor employees. Recent pieces of legislation have been introduced to reduce mandatory overtime pay and loosen some government-imposed requirements for small businesses.

[edit] Major Polish companies

PKN Orlen - Petrochemical Giant
Telekomunikacja Polska(TP S.A)- Telecom
PKO BP- Banking
PKP - railway system
Poczta Polska - Polish Post
PSE National Grid
Elektrim - Diversified Utilities/ Mobile Phone Service
Fiat Poland- Polish branch of Fiat Group (former FSM), Builds Panda and Seicento
KGHM Polska Miedź - copper mines and mills
General Motors Poland
FSO Motors - Former Daewoo FSO. Produces Lanos and Matiz automobiles
Grupa Lotos- Petrochemical Firm
PZU- Insurance Company
Warsaw Stock Exchange

[edit] Other statistics

Warsaw after dark

Investment (gross fixed): 18.4% of GDP (2004 est.)

Household income or consumption by percentage share:

lowest 10%: 3.2%
highest 10%: 24.7% (1998)

Distribution of family income - Gini index: 31.6 (1998)

Agriculture - products: potatoes, fruits, vegetables, wheat; poultry, eggs, pork

Industrial production growth rate: 10% (2004 est.)

Electricity:

production: 150.8 TWh (2004)
consumption: 121.3 TWh (2004)
exports: 15.2 TWh (2004)
imports: 5 TWh (2004)

Electricity - production by source:

fossil fuel: 98.1%
hydro: 1.5%
other: 0.4% (2001)
nuclear: 0%

Oil:

production: 17,180 barrel/day (2001 est.)
consumption: 424,100 barrel/day (2001 est.)
exports: 53,000 barrel/day (2001)
imports: 413,700 barrel/day (2001)
proved reserves: 116.4 million barrel (1 January 2002)

Natural gas:

production: 5.471 billion m³ (2001 est.)
consumption: 13.85 billion m³ (2001 est.)
exports: 41 million m³ (2001 est.)
imports: 8.782 billion m³ (2001 est.)
proved reserves: 154.4 billion m³ (1 January 2002)

Current account balance: $-3.831 billion (2004 est.)

Exports - commodities: machinery and transport equipment 37.8%, intermediate manufactured goods 23.7%, miscellaneous manufactured goods 17.1%, food and live animals 7.6% (2003)

Imports - commodities: machinery and transport equipment 38%, intermediate manufactured goods 21%, chemicals 14.8%, minerals, fuels, lubricants, and related materials 9.1% (2003)

Reserves of foreign exchange & gold: $41.88 billion (2004 est.)

Debt - external: $99.15 billion (2004 est.)

Currency exchange rates: Złoty per US dollar - 3.15 (June 2006) 3.7 (2004), 3.8891 (2003), 4.08 (2002), 4.0939 (2001), 4.3461 (2000). Złoty per euro 3.96 (Aug 2006)