Poland overview

Poland stadium and cityscape

In Poland we focus on:

Promoting the low carbon economy. Coal still accounts for more than 80 percent of Poland’s primary energy supply and the economy remains among the least energy efficient in the EU. Promoting low carbon solutions, energy efficiency and reduction of green-house gas (GHG) emissions will therefore remain a key strategic priority for the Bank’s operations over the coming years. The Bank will continue to support diversification of energy and fuel supplies (especially in renewable energy) and improving energy efficiency (both on the demand and supply side), together leading toward a more sustainable energy market in the country.

Enhancing the private sector’s role in the economy. The Polish state continues to play a significant role in the economy, notably in the power, chemical, natural resources, transport and municipal sectors. Accelerating the implementation of the structural reform agenda is crucial to consolidate transition and support the recovery that has slowed markedly. The Polish authorities have acknowledged the need to push ahead with greater market liberalisation. Moving Poland toward a more resilient economic model built on private investment and productivity increases will also require more innovation, providing risk capital and corporate restructuring (operational and financial), and will include supporting Polish companies in their regional expansion and cross-border investments.
Assisting in the development of a sustainable financial sector and capital markets. Although the banking system remained sound in the course of the crisis, a number of systemic vulnerabilities emerged, especially banks’ balance sheet mismatches, lack of sponsors liquidity support and the need for consolidation. In the current environment, high risk aversion by banks and deteriorating credit quality in the economy are leading to substantial financing constraints, in particular for small and medium sized companies and in the poorest regions. EBRD will assist in the development of a more sustainable financial sector by helping banks address crisis-inherited vulnerabilities and promoting the development of local currency capital markets in order to reduce the sector’s dependence on foreign financial inflows.

As well as being a country where the EBRD works, Poland is also an EBRD donor with EUR 2.5 million of contributions. Poland became a donor to the EBRD in 2005, providing Technical Cooperation support in the Western Balkans. It contributes to the Eastern Europe Energy Efficiency and Environment Partnership (E5P). In 2015, Poland also became a donor to the EBRD's Ukraine Stabilisation and Sustainable Growth Multi-Donor Account.                   

The EBRD's latest Poland strategy was adopted on 11 April 2018.

Current EBRD forecast for Poland’s Real GDP Growth in 2019:  4.1%

Current EBRD forecast for Poland’s Real GDP Growth in 2020:  3.5%

GDP growth in Poland accelerated to 5.1 per cent in 2018, propelled, as elsewhere in the CEB region, by strong domestic demand. The recovery in investment was the highest since 2015, driven by robust investment expenditures by local governments and (less so) by corporates. The latter was observed in larger companies and in sectors that significantly depend on EU funding, such as construction, utilities and transport. Household consumption remained strong as real disposable incomes continue improving, with average real wage growth exceeding 6 per cent in 2018.

Amid a deteriorating external environment, domestic demand is expected to remain the key engine of growth, additionally boosted by generous government spending, starting from 2019, which is a double election year in Poland (EU and general elections). In February 2019, the ruling Law and Justice party announced a massive fiscal package, which is likely to total about 1 per cent of GDP in 2019 and some 2 per cent in 2020. The package includes expansion of child subsidies, a one-off pension payout, a liquidation of PIT for those under 26 years old, and an increase in the tax-free allowance.

This fiscal expansion comes at the peak of the business cycle and it uses up much of whatever fiscal space was left, constituting a permanent upward shift in the structural budget deficit. Both the national expenditure rule and the EU Stability and Growth Pact will be exceedingly difficult to meet already in 2019.

Overall, GDP growth this year will likely decelerate to 4.1 per cent and further to 3.5 per cent in 2020.

Poland in the EBRD's 2018-19 Transition report