British Chamber of Commerce Guide 2006/07

With economic growth expected at 4.5 per cent (2006), a young and well-educated labour force, and located at the crossroads between eastern and western Europe, Poland offers a large potential market in central Europe.

With economic growth expected at 4.5 per cent (2006), a young and well-educated labour force, and located at the crossroads between eastern and western Europe, Poland offers a large potential market in central Europe.

Current GDP in Poland is about 20 percent higher in real terms than in 1989. Growth was 3.2 percent in 2005 and it is expected to be around 4.5 percent in 2006. Exports were still the main factor driving growth in 2005, but there were also strong signals of recovery in domestic demand including investment (9.8 percent growth in the fourth quarter of 2005). In January 2006 inflation stood at 0.7 percent and is expected to stay low.

Poland’s entry into the European Union in 2004 has fostered economic growth, and a stable commercial environment in its drive to modernize its economy and globalize its commercial activities. With 38.2 million people, Poland is the sixth largest EU country.

Trading Climate

Poland will receive a total of 59.5 billion in EU funds for 2007-2013. The Ministry for Regional
Development is planning a huge investment programme which could present opportunities for British companies across a wide variety of sectors, including infrastructure, environment and education. The Ministry for Regional Development has announced two new draft operational programmes for the years 2007-13, "Infrastructure and the Environment" and "Human Resources". Their combined cost is to
be E35 billion, with E28 billion to come from EU funds.

According to the Ministry, the principal purpose of the Infrastructure and the Environment Operational Programme is to make Poland and its regions more attractive for investment by developing the technical infrastructure. The overall cost of the programme is more than E26 billion, of which over E1 billion is from the EU, nearly E4 billion from domestic funds, and E1 billion will come from private funds.

Construction materials and equipment

The average growth of this sector over the next several years is predicted to reach eight to 10
per cent yearly. Growth in the Polish economy in 2004 and in 2005 (respectively 5.7 per cent
and 3.5 per cent) provided a significant boost to the building industry. Poland’s accession to
the European Union also had a positive effect on this industry sector. In the face of expected
increase in VAT rates (seven per cent before Poland became an EU member, 22 per cent after) the demand and sales of construction materials and equipment went up 35 per cent in the first four months of 2004. Local production has also increased proportionately.

It is expected that the positive trend in this industry will also continue in 2006. EU funds for infrastructure development should result in new construction projects and new investments. The residential sector will plateau while growth will continue in the construction of commercial facilities, warehouses, roads and infrastructure projects. The overall positive financial status of construction firms, and an expected increase in bank credits for building and utilizing EU funds should all have a positive effect on the construction materials and equipment industry in 2006.