Poland is considered one of the most successful examples of the transition from communism to market economy. The return to democracy in 1990 was followed by liberalizing the economy, privatization of small and medium size State-owned companies and rapid growth of private sector which today generates 75% of the GDP and employs over 70% of all employable population.
Due to growth of export, industrial production and investment, the GDP level reached 5.4% in 2004 which made Poland's economy growing much faster than average EU 25 Member State (1.6%) and the Euro zone (1.3%). GDP in 2004 (at current prices) amounted to PLN 884,2 billion (~$221,050 billion).
It is expected to grow by 5.1% in 2005. The sources of GDP are: services (67%), industry(30%) and agriculture (3%).
Annual consumer price inflation was 4,4% in 2004, compared with 1,7% in 2003 and 0,8% in 2002. According to current forecasts, the annual inflation in 2005 will not exceed 4,5%, but, hey - that’s nothing compared with galloping inflation of 580% in 1990!
Unemployment rate is still high though at 19%.
Poland is a member of European Union, NATO, OECD, WTO and CEFTA.
Poland has substantial mineral resources. It has the world’s fifth-largest proven reserves of hard and brown coal, in addition to deposits of copper, sulphur, zinc, lead, silver, magnesium, salt and natural as well as deposits of chalk, kaolin, clays, and potash.
Main types of industry: machine building, iron and steel, mining, shipbuilding, automobiles, furniture, textiles and apparel, chemicals, food processing, glass, beverages.
Exports - furniture, cars, ships, coal, apparel.
Imports - crude oil, passenger cars, pharmaceuticals, car parts, computers.
Agriculture plays an important role in Poland’s economy. Agricultural land accounts for approx. 54 % of the total area of the country, 38 % of the Polish population live in rural areas and some 25% of the labour force is employed in agriculture. The contribution of agriculture to the GDP, however, represents only 3%. Marketable production accounts for only approximately 60 % of the total agricultural output, with the rest of output being used for self-supply. Low use of chemicals is typical for Polish farms making its products generally ecological and healthy. Poland’s main agricultural crops are wheat and other cereals, potatoes, sugar beets and fodder crops. Poland is the leading exporter of apple concentrate and is among the world’s leading producers of berries, cabbage and carrot. In addition, over 8.9 million hectares are forested, making sawn timber an important resource.
The main institutions of the Polish capital market are the Warsaw Stock Exchange, which organises both cash and derivatives markets, and the National Depository for Securities (NDS), which handles clearing and settlement on the regulated market and maintains securities in the form of computer records. The National Bank of Poland (NBP) is a clearing bank for the Depository. A wholesale transactions in bonds and T-bills are concluded on the Electronic Treasury Securities Market (ERSPW), a dedicated trading platform of regulated off-exchange market maintained by CeTO. CeTO, being a part of the WSE capital group, also operates a market for shares and corporate and municipal public utilities bonds. As of year end 2003, the Exchange held 41.54% of CeTO capital. The capital market is supervised by the Polish Securities and Exchange Commission (PSEC).
The Warsaw Stock Exchange was established in 1991 and operates electronic paperless trading. Its capital amounts to PLN 41,979,000 . Currently, the WSE has 38 shareholders, including brokerage houses, banks, a listed company and the State Treasury.
The following securities are traded on the WSE: equities, bonds, subscription rights, allotment certificates and investment certificates, as well as derivative instruments in the form of futures contracts, options, index participation units and warrants.
The impressive dynamics of the WSE’s development are best reflected in the growing number of companies listed and in the booming capitalisation. The year 2004 was one of the best in the history of both the Warsaw Stock Exchange and the whole Polish capital market. It was the time of numerous public offerings and significant increase in the turnover. In 2004, 36 new companies made their debuts on the WSE and the total number of listed companies rose from 203 to 230 (9 were delisted). Among newly-listed companies there were 4 foreign ones (BorsodChem, IVAX, bmp and MOL). The year 2004 brought also the highest equity turnover - PLN 109.8 billion in total. As of December 31, 2004, domestic companies market capitalisation amounted to PLN 214.3 billion. In relation to the last trading session of 2003 it is a 53% increase.
The Accession Treaty has been signed in Athens on April 16th, 2003. One year later, on May 1st 2004 ten new countries, including Poland, became full members of the European Union. Thus, the efforts of the past decade achieved its height. The calendar of negotiations included the following key events:
6 December 1991 — signing the Europe Association Agreement with aim to establish a free trade area over a period of 10 years and to institute a permanent dialogue at the highest governmental levels;
5 April 1994 - Poland applied for EU membership;
31 March 1998 — beginning of accession negotiations in 31 areas;
13 December 2002 — concluding negotiations on Copenhagen European Council meeting;
16 April 2003 - signing the Accession Treaty with a view to full EU membership on 1 May 2004.
Poland has agreed to adopt the entire acqui communautaire, however some laws and regulations require a step-by-step approach and the date of their full implementation has been set after the accession.
The efforts towards adopting laws and regulations of the EU has been supported by the following pre-accession instruments:
PHARE, which was originally an acronym for "Poland and Hungary Action for the Reconstruction of the Economy" became one of the most important EU instruments for economic restructuring of the accession candidates. Under the PHARE programme between 1990 and 2000, the EU has made available a total of EUR 10.6 billion to support the process of reform in the countries of Central and Eastern Europe. Since 1998 the programme has been tailored specifically to the needs of the accession process, including twinning programmes between EU institutions and those of the accession countries. Approximately 70% of its budget went on supporting investment to comply with the acquis communautaire and about 30% went towards institution building in the candidate countries. In the years 2000-2003 Poland has spent on average 450,000 million euro annually under Phare programme.
Additional pre-accession instruments in the areas of agriculture and structural policy has been introduced in March 1999 in order to intensify accession preparations: SAPARD (Special Accession Programme for Agriculture and Rural Development) to promote modernization of agriculture and the food industry and ISPA (Instrument for Structural Policies for Pre-accession) to promote infrastructure projects in the areas of transport and the environment. SAPARD and ISPA programmes for Poland amounted to over 1 billion euro.
On May 1st, 2004 Poland officially became a European Union Member State.
It is represented in the EU institutions as follows:
- European Parliament - 54 out of 732 seats;
- European Council — 27 out of 321 votes;
- European Commission — 1 Commissioner;
- Tribunal of Justice — the right to nominate one Judge,
- Court of First Instance — at least 1 Judge;
- Court of Auditors — 1 member;
- Social and Economic Committee and Committee of Regions — 21 seats in each Committee;
- European Central Bank — President of National Bank of Poland is representing Poland in ECB General Council;
- European Investment Bank — Poland is a EIB shareholder since the day of accession, it is represented by one Board Member and a number of executives in the Board of Directors;
Polish became one of the European Union official languages.
Since GDP in Poland is lower then 75% of EU average, Poland benefits from four structural funds:
European Social Fund — EFS
European Agriculture Guidance and Guarantee Fund — EAGGF