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Poland Needs Investment Boost: Challenges Remain Despite Growth

ECONOMYPoland Needs Investment Boost: Challenges Remain Despite Growth

Poland has become an economy characterized by difficult-to-access and expensive labor and is also not very innovative. To sustain the high economic growth we’ve observed over the last 20 years, we need more investment—both domestic and foreign. “The revival of private investment will determine the sustainability of Poland’s GDP growth for many years,” according to a report by ING Bank Śląski and the European Economic Congress. Economists believe that Poland now has a critical opportunity to stimulate investments, with sectors such as energy transformation, digitalization, automation, artificial intelligence, and transport being key areas to focus on.

“Our economic situation has stabilized; we are not growing too rapidly, and the period preceding this stabilization saw a significant decrease in companies’ investment appetite, which is why we conducted a study asking businesses about investment barriers and their future outlook,” says Rafał Benecki, Chief Economist at ING Bank Śląski, to the Newseria Biznes news agency. “One of the interesting conclusions is that the scale of shocks that businesses have had to contend with in recent years has been unprecedented. The period from joining the EU to the pandemic was relatively calm and dynamic, even considering the financial crisis. The last four years have been a continuous string of shocks, including the pandemic, war, energy shock, inflation, interest rate hikes, and demand collapse. All of this weighs heavily on managers’ minds, making them more cautious about the future, although they still plan to invest.”

According to the authors of the report “Investments in Poland Through Business Eyes: Regression and Hopes,” the revitalization of private investments and the reversal of the long-term downward trend in the investment rate will determine the durability of economic growth in our country. In recent years, the Polish economy has grown mainly due to consumption, while investments have slowed due to internal regulatory and tax difficulties, erosion of trust in free-market economy institutions, and the aforementioned shocks. While investments in Poland accounted for 20.4% of GDP in 2015, this ratio dropped to 16.8% in 2022. The year 2023 brought a slight improvement to 17.4%. This is historically low and clearly below the EU average.

“Our survey among business leaders confirms findings from the International Monetary Fund, stating that efficient institutions, strong judiciary, predictable taxes, clear law, respect for property rights—all influence firms’ courage to invest. The country’s perception and the risk stemming from these institutions also matter to foreign investors, whom we also rely on,” says Rafał Benecki. “Companies are hoping for a change in this area, that these institutions will gradually strengthen and improve. Today, the economic situation is not the best, but it is rebounding, and this optimism is visible among businesses. It may be slightly worse with the situation of our trading partners, where the economy is recovering slowly, but improvement will eventually come. These are important conditions for investments to get moving.”

Polish entrepreneurs are pinning great hopes on unlocking EU funds, including the Recovery and Resilience Facility (RRF), and improving Poland’s image internationally. They see these as premises for an investment impulse.

The study clearly indicates that sectors and areas for increasing investment in Poland will be energy transformation, including renewable energy sources and nuclear energy, energy storage, energy efficiency, and energy networks, digitalization, automation, robotics, Industry 4.0, the IT sector and applications of artificial intelligence (AI), and transport, particularly railways, and the construction sector.

“These areas are necessary and crucial in the international situation Poland finds itself in after the outbreak of the Russian war in Ukraine. This conflict and risks in other parts of the world create motivation for international, American, and European firms to move production closer to markets and reduce risks associated with long-distance supply chains or relying on less-friendly countries. Thus, we see the trend of nearshoring and friendshoring, which means moving production to friendly countries that promise long-term cooperation. Poland, in particular, can benefit from its alliance with America under NATO and energy cooperation, as well as with the European Union in strengthening the single market,” says Leszek Kąsek, economist at ING Bank Śląski.

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