Agriculture
Poland’s economy is heavily reliant on agriculture. The farming sector generates a large fraction of the county’s GDP and employs around 8 per cent of its total workforce. The sector is highly diverse and includes arable and livestock farming, aquaculture, and horticulture. Polish arable farmers primarily grow wheat, barley, oats, potatoes, corn, rye, rapeseed, and sugar, as well as sunflowers, and fodder crops. The country’s farms are well grounded in traditional agronomical knowings and dependent on preventive conservation methods. Livestock farming in Poland is mainly devoted to dairy-cattle and pigs. The country’s largest companies are in the meat industry and the production of dairy products. Aquaculture is highly developed on the country’s coastal area and the Baltic sea. Annual catches for aqua-farming products reach around ten thousand tons each year, this is mainly trout, bream, crayfish and European eels.
Industry and Trading
Industry has been a key sector of the country’s economy for centuries and makes up a large fraction of the country’s GDP. Polish industry consists of various segments such as automobile, energy, retail, chemical and pharmaceuticals. The country’s steel industry is of particular importance. Many technological advancements in the sector mean that Poland is one of the largest producers of steel within the European Union and in the world. Coal and lignite form the majority of the county’s energy production and Poland is Europe’s largest producer and exporter of coal.
Poland is the second largest economic partner with the European Union after Germany, responsible for 5.6% of goods exports and imports. Poland is the largest exporter and importer of food in the union and is the third largest importer of agricultural products. The country’s strategic location makes it an ideal hub for foreign trade. Poland has the sixth-largest economy in Europe and the fifth-largest population.
Services
The service sector is the most important sector of the Polish economy and the sector’s share of the total GDP has been steadily increasing over the past three decades. The services sectors primary focus is on banking, the information sector, retailing and wholesaling, professional services and the tourism industry. Poland has a highly developed banking industry focused on domestic banking services. Many of the banks, while small, have been substantially internationalised over the past decades. The information sector has been traditionally the backbone of the Polish economy and has been responsible for much of the countries economic boom.
The retail industry in Poland has developed significantly in the past decade. This sector has been responsible for much of the country’s economic growth and is projected to continue to do so for the foreseeable future. The Polish professional services industry is based primarily on legal and accounting services. Poland is starting to become a top destination for international tourism with a growing number of domestic and foreign tourists visiting the country yearly.
Innovation
The Polish government has been increasingly focused on investing in innovation and technological development and research, with the country investing 613 billion euros in research and development during the 2019 fiscal year. This marked a 25% increase in research and development investment from the 2018 fiscal year. On the national level, the government has implemented a range of policies aimed at encouraging start-ups, research partnerships and investments in applied trades. On the international level, Poland has become a member of the 4th industrial Revolution, or the ‘Industrial internet of things’. This global initiative seeks to connect companies from all over the world and to promote technological innovation and collaboration.
Poland’s government has also invested heavily in the digital economy sector, with the country having become a leader in the emerging field of cloud technology, robotics, big data and artificial intelligence. The country has become a hotspot for start-ups, and an increasing number of young entrepreneurs are setting up their businesses in the country. Poland is also part of the EU’s .Tech initiative and has become an increasingly attractive location for investors.
Currency and Exchange Rates
Poland has a regulated financial market and is part of the free-market economy of the European Union. Its currency is the zloty, which is pegged to the euro and it’s exchange rate can be subject to change depending on economic and political factors. In July 2020, the zloty hit a seven month high of 4.34 against the euro, and then dropped to a four month low of 4.5 against the euro in August 2020 due to the coronavirus pandemic.
Government Investment and Spending
The Polish government has heavily invested in the country’s economic infrastructure and is the largest employer in the country. The government is responsible for investments in public and agricultural services, industry and infrastructure, research and development and employment and family services. The government has also invested heavily in social security, healthcare, education and Defence. Government spending and investment have been a key part of the country’s success in the past decade, with investment and spending on infrastructure, education, healthcare and social services proving highly beneficial for the economy.
Taxation
The Polish taxation system is moderate compared to other countries with a flat rate of Mo 32%. Personal income is taxed at a progressive rate ranging from 18% up to 32%. Value-Added Tax (VAT) stands at 23%. Corporate tax is set at 19%, with a 5% additional tax on profits over 120 million zloty. Poland also has a variety of social taxes such as the health insurance contribution and the pension contribution, which amount to a combined rate of 33%.
Brexit Impact
Brexit has had a major impact on Poland’s economy as two-thirds of its foreign investments come from the United Kingdom. The UK is the largest recipient of Polish investments and the largest supplier of imports to the country. As the Brexit process is still ongoing, the exact impacts on the Polish economy are still not known. However, it is estimated that the loss of foreign investments could lead to a 0.7% shrink in Poland’s GDP growth and a decrease in consumer spending and investment in 2020.
Alternative Economic Opportunities
Alternative economic opportunities for Poland could be found in renewable energy sources such as wind and solar. Investing in renewables could create an estimated 8 million new jobs in the sector by 2050. Additionally, focus on the service sector could help increase the countries growth rate, as the service sector is the second largest employer in the country and accounts for the majority of the countries exports. The country could also benefit from increased tourism numbers, particularly from Eastern countries. Poland has a global perception for its medieval castles, and rural landscapes which entice tourists from all over the world. With proper investment in the service sector and increased promotional efforts, this sector could become a larger contributor to the countries overall GDP.
