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3.1 An overview of the Polish economy

Major macroeconomic indicators

 

2007

2008

2009

Population (million of inhabitants)

38.1

38.1

38.2

Gross domestic product (US$ billion)

425

529

431

Real GDP growth (%)

6.8

5.1

1.8

Consumer prices (year-on-year % change)

2.5

4.2

3.5

Exports of goods (US$ billion)

138.8

171.9

136.7

Imports of goods (US$ billion)

164.2

210.5

149.6

Average exchange rate (Polish złoty per US dollar)

2.8

2.4

3.1

Poland, with some 38 million inhabitants, is by far the most populous CEE country in the EU. Enjoying an average annual growth of 4.8% in GDP during 2004-2009 (compared with 3.4% during 1998-2003) and a CAGR of 20% in per-capita GDP, Poland has clearly benefited from its EU membership. The four freedoms of movement of labour, capital, goods and services within the Single European Market not only provide plenty of job opportunities for Polish workers, but also raises their purchasing power and in turn living standards. This rising purchasing power, a result of the strong economic growth after its EU accession, has boosted not only the expansion of consumer markets and therefore appetite for imported consumer goods and services that are not locally available in the country, but also facilitated the upgrading and consolidation of its retail sector.

Real GDP growth in Poland and the EU

Source: Central Statistical Office (GUS), Eurostat

Integration of Poland into the EU plays no small part in the fast expansion of Hong Kong exports to the country. Being the biggest of the CEE countries that are members of the EU, Poland offers not only a promising domestic market over the medium to long term, but also a gateway to Western Europe and other huge consumer markets like Ukraine and Russia. Coupled with the country’s status as a distribution centre in CEE, demand from Poland for a wide assortment of consumer products has been rising. This bodes well for Hong Kong exporters interested not only in the domestic Polish market, but also the CEE region as a whole. Of most interest to Hong Kong exporters, their adoption of the EU’s trade policy and measures has translated into a relaxation of import barriers.

While escaping a recession in the past two years, Poland is apparently not immune to the economic and sovereign debt crisis lingering across Europe. Falling demand from its main trading partners, especially Germany, France, Italy, the UK, Czech Republic and Russia, will continue to dampen Poland’s exports for a while, and a contraction of foreign capital inflows will also take its toll on the Polish economy.

Foreign direct investment (FDI) in Poland

Source: The Polish Information and Foreign Investment Agency (PAlilZ), National Bank of Poland

Yet as Poland is in the best fiscal and financial condition among the new EU member states, it maintains a far more stable market environment against the backdrop of the rest of the region. On the back of a lower level of external debt and a better credit rating than its neighbours, Poland may count on external financial support, if needed, to successfully tackle crisis-connected budget difficulties. With a large domestic market of 38 million consumers and a relatively low export reliance of around 30% of GDP, Poland is expected to outperform its weaker counterparts in the region as well as most developed economies from a medium- to long-term perspective.

Content provided by Hong Kong Trade Development Council
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