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POLAND
Economy

Cities in POLAND

Krakow Lodz Warsaw

Economy

General

After the Second World War, Poland concentrated completely on the economic model of the Soviet Union. Banks and large companies were nationalized and large land holdings were discontinued. Only the smaller farms and the service sector remained in private hands. The standard of living remained very low for a long time, but Poland gradually changed from a predominantly agricultural to an industrialized country. In 1995, 22% of the labor force worked in agriculture, 32% in industry and 46% in trade and services.

The private sector currently employs 65% of the Polish labor force. The regional differences in unemployment are large. Urban areas such as Warsaw, Krakow and Poznan have a low unemployment rate. In 2017, the unemployment rate for the whole of Poland was 4.9%.

Between 1980 and 1995, the gross national product (GNP) per capita increased by an average of 2.4% per year. Poland has also suffered from the economic crisis. In recent years (2011, 2012 and 2013) the growth was 4.5%, 1.9% and 1.3% respectively. In 2017, economic growth was 4.7% In absolute terms, however, GDP is not very high ($ 29,600 per capita in 2017).

After joining the European Union in 2004, Poland left the CEFTA. The Cefta had concluded an agreement on mutual trade with Hungary, Slovakia, Slovenia, Romania, Bulgaria and Czech Republic .

Agriculture, livestock and fishing

Large landholdings were abolished after the communist takeover, that is, land holdings above 50 ha (100 ha in the newly acquired western areas). Initially the smaller private companies were left alone, but after 1949 attempts were made to induce farmers to merge their holdings into collective farms or to form cooperations.
In an attempt to gain more control over the agricultural sector the so-called agricultural circles were established: institutions that rent out agricultural machines, act as a joint purchasing agency for private farmers and organize community life in the countryside. Private ownership in the agricultural sector has always dominated during the communist period (between 75 and 85% of the total agricultural area). The state farms were closed in October 1991.
Of the current 2 million agricultural businesses, approximately 95% are privately owned. The 0.5 million farmers of those companies were free to start their own business. The average private company had an area of 1-10 ha in 2013 and the average agricultural company is only 7 ha. Unemployment in agriculture, especially in the North and Northeast, has been rising quite rapidly. The entire agricultural sector makes only a limited contribution to GDP (2.4% in 2017).
In addition to cereals (wheat, rye, barley and oats), Poland traditionally produces a lot of potatoes and sugar beets.

Livestock farming mainly consists of cattle and pig farming. Lack of animal feed and poor infrastructure are the main barriers to growth in this sector. As a result, intensive livestock farming has decreased considerably, especially the number of sheep and cattle. The least affected is pork production.

Fishing in the Baltic Sea and beyond is carried out by a large fishing fleet. Cod and herring are the main products.

Industry

Most of the industry is located in the south of the country, with Upper Silesia as the center of gravity. (metal, electrical, chemical and woodworking industry). Major industrial cities are also Lódz (chemical industry and especially textiles), Warsaw (tool and machine construction, textiles, building materials), Poznan (machine construction, cellulose, building materials, textiles) and Gdansk (ship and machine construction).

Chemistry and plastics

The chemical sector is important to the economy and a lot of foreign capital is needed to renew this industry. EU legislation prescribes strict environmental requirements and requires additional investment.
Companies produced rubber and plastic articles, chemicals, chemical products and synthetic fibers. More than 600 companies are owned by foreign investors.

Service sector

Polish banks and other financial institutions still show a number of weaknesses, including inefficient organization, a limited range of modern services and inexperienced management. Credit cards and online banking are becoming increasingly popular in Poland.
Further liberalization will lead to a further restructuring of the Polish banking sector, something which has also been agreed in an agreement between the EU and Poland. Many foreign banks have also established themselves in Poland.
The insurance sector has since been fully privatized. The largest player in the insurance market is the former state insurance company PZU with a market share of 60%. Since 1999, foreign insurance companies have been allowed to operate on the Polish market.

ICT sector

Internet usage among private and business users has been growing rapidly in recent years.

Telecommunications is one of the fastest growing sectors in the Polish economy. Since the 1990s, the highly outdated telecommunications network, which suffers from capacity problems, has been modernized and expanded. The number of mobile connections is on the rise.

Machine industry

The machine industry in Poland mainly consists of machines for the packaging industry, agriculture, machine tools, woodworking equipment and construction and infrastructure. This industry is currently undergoing major changes, with well-known foreign companies such as Siemens, Danfoss and Bosch playing a major role. They have invested more than 1 billion euros in recent years alone.

The Poles generally make excellent products but even they are already facing competition from the really low-wage countries. Many second-hand parts and machines are also imported, which means that the domestic demand for these products is declining. Due to the growth of the construction sector and the restructuring of factories, this Polish industry can survive.

Metal industry

After the communist era, the Polish metal sector was one of the first industries to be restructured. In a short time this had huge consequences for employment in the sector. In 1998 there were still 592,000 people working in the metal industry, compared to only 38,000 in 2001.
Approx. 50,000 jobs were moved to sectors outside the steel sector.
The metal sector has three sub-sectors: metal products, machine and equipment industry and base metals. The metal products industry is growing fastest with approximately 41,000 mostly small companies in the south of Poland.
The largest turnover in this total sector is achieved by the basic metal industry. The ten largest blast furnaces account for 58% of the turnover in this sub-sector.

Mining

Poland is rich in minerals, including coal and lignite. Coal is mined in Upper Silesia, Lower Silesia and the Lublin Basin. The stocks of coal are enormous, about 65 billion tons. The vast majority of the energy is still generated by coal, which incidentally has an excellent quality.
Due to the deeper layers of coal, mining is becoming increasingly difficult and the installations are also outdated. As a result, coal extraction is currently loss-making and a large-scale remediation of the mines is being worked on.
The country also has rich copper, zinc and sulfur reserves. Iron ore, gas and petroleum are also extracted, but insufficiently exploited to meet Poland's own needs.

Construction and infrastructure

Since 1989, the Polish construction market has been interesting for foreign investors due to the many overdue maintenance and the lack of investments in the past. The Polish construction market will be one of the fastest growing markets in Europe in the coming years.
There are more than 300,000 companies active in the construction industry and the sector employs nearly 1 million people. Less than 1% of companies employ more than 100 employees, but they are responsible for more than 30% of total industry sales.
Major foreign investors are from Germany, France, Austria and The Netherlands.

Poland's infrastructure is not that great yet. The state of maintenance of the more than 350,000 kilometer long road network is only 15% good, 50% reasonable and 35% bad.
The modernization and expansion of the railways, the sea and airport will also cost many billions. Since 2000, Poland can count on EUR 120 million annually from the EU for the development of the road network.

Food processing industry

This sector is very important for Poland, because it is responsible for about a quarter of the total industrial production. Over the past ten years, EUR 5.7 billion has been invested by mainly foreign companies.
These include big names such as Heineken (with a 32% market share in the beer market), Coca Cola, Philip Morris, Nestlé, Pepsico and Farm Frites. Major retail chains from Western Europe already have a market share of 30%, and it is expected that this will rise to 50% in the not too distant future.

Within the EU, Germany and the Netherlands are the largest exporter of food to Poland. Germany is also the largest food importer from Poland.

Energy

The majority (97%) of Polish electricity is generated by coal and lignite-fired power stations. The rest of the energy is generated by hydroelectric power stations. In recent years, coal production has exceeded 100 million tons and lignite production has amounted to approximately 60 million tons. A major disadvantage of the fired power plants is the air pollution they cause in Poland. Green energy is slowly starting to emerge, such as wind energy. Electricity is imported from Germany, Belarus and the Ukraine, among others.

The petroleum drilled into the Baltic Sea appears to be still limited and the refining and processing facilities for oil are still limited. In urgent need of modernization.

Poland is still highly dependent on Russia for natural gas (90% comes from that country). In 2001 contracts were signed with a Danish and a Norwegian company to reduce dependence on Russia.

Trade

Poland has a trade deficit. Main exports are coal, chemicals and food. Imports include machinery, petroleum, chemical products and foodstuffs. Main trading partner is Germany and further Italy, Russia, United Kingdom, the Netherlands and France.

Banking

As of 31 Dec. 1989, the entire banking system was reorganized. As a result, the National Bank of Poland became independent from the government and was given extensive powers over the exchange rate and the level of interest. After 1989 the number of commercial banks has grown explosively. From that year onwards, a number of banks, wholly or partly privately owned, were established. The Warsaw Stock Exchange was opened in 1991.

Traffic

The development of the railway network has lagged behind economic growth. Less than half of the total network (almost 25,000 km) is electrified. The road network is quite good these days.
The merchant fleet consists of about 600 ships (excluding the fishing fleet). The main sea ports are Szczecin, Gdynia and Gdansk.
Warsaw has an international airport. The national airline is the Polskie Linie Lotnicze (LOT).

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Sources

Dydynski, K. / Poland
Lonely Planet

Hus, M. / Polen
ANWB media,

Wijnands, S. / Polen
Gottmer,

CIA - World Factbook

BBC - Country Profiles

Last updated September 2021
Copyright: Team Landenweb