Economic studies
Poland

Poland

Population 37.8 million
GDP per capita 17,946 US$
A4
Country risk assessment
A2
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Synthesis

major macro economic indicators

  2020 2021 2022 2023 (e) 2024 (f)
GDP growth (%) -2.0 6.9 5.3 0.2 2.8
Inflation (yearly average, %) 3.7 5.2 14.3 11.4 3.8
Budget balance (% GDP) -6.9 -1.8 -3.7 -5.5 -5.6
Current account balance (% GDP) 2.3 -1.3 -2.4 0.7 -1.2
Public debt (% GDP) 57.2 53.6 49.3 51.7 53.8

(e): estimate (f): forecast

STRENGTHS

  • Market of 38 million people
  • Proximity to Western European markets
  • Price competitiveness; qualified and cheap labour force
  • Integrated into the German production chain
  • Diversified economy (agriculture, variety of industries, services)
  • Resilient financial sector

WEAKNESSES

  • Inadequate investment levels; domestic savings rate too low
  • Weakness in R&D; high content of imports in exports
  • Developmental lag of Eastern regions
  • Structural unemployment, low level of female employment
  • The EU rule-of-law dispute which is nonetheless expected to improve with the latest change of government

RISK ASSESSMENT

Return to growth

After minor growth last year, the Polish economy is expected to expand in 2024. Household consumption will resume as the growth driver after easing on back of the high inflation recorded in 2022 and 2023. The inflation rate exceeded 18% year-over-year in February 2023 and since then has been on a downtrend, reaching 6.2% in December 2023. Furthermore, the disinflation process will continue in the first half of 2024 before reversing, once measures (a cap on electricity prices, reduced value-added tax rate on certain food products) to limit consumer price increases are lifted, which is expected to take place in mid-2024. That said, the tight labour market – the unemployment rate stood at 2.7% according to Eurostat in December 2023 – plus solid wage growth and improved consumer confidence will boost consumer spending.
The Polish central bank already started to lower interest rates in September 2023, which resulted in two rate cuts in the benchmark rate by 100 basis points in total to 5.75%. However, further monetary easing is questionable given the expected improvement in economic activity as well as the rebound of inflation in the second half of year, as mentioned above. At the same time, core inflation remained above the headline level during last months of 2023 and stood at 6.9% in December.
While household consumption will offer the largest contribution to growth, investments should also support economic activity to some extent. Poland should benefit from the unblocking of EU funds, including those of the Recovery and Resilience Facility. Once the economy shows clear signs of improvement, companies will be more willing to invest in domestic fixed assets, while foreign direct investments (FDI) will increase as Poland is attractive in terms of quality and labour costs, and its geographical proximity to Western Europe. The recent change of government could also further encourage foreign investments. Net exports will contribute positively to growth thanks to increased exports especially if the economic activity improves in Western Europe, which is Poland’s main foreign trade destination. Nevertheless, it will not become a growth driver as higher imports will be recorded on back of more robust household consumption and higher component imports.

 

Fiscal balance under pressure

Poland will again record a wide budget deficit in 2024. Whereas the expected economic rebound could bring higher revenues, retaining the above-mentioned measures (capped energy prices and reduced value-added tax) will weigh on the budget. Furthermore, the new government formed after the October 2023 elections is likely to fulfil its electoral promises of keeping the previous social measures and increasing pay for teachers and public administration employees. At the same time, Poland will continue spending on defence (3.9% of GDP in 2023).
The current account balance will record a deficit, after two years of surplus. Poland’s goods exports have been suffering from sluggish economic activity in Western Europe and especially in Germany, which remains its main export destination. Subdued global trade also impacts Poland as the country is integrated in various supply chains. However, the country could benefit from nearshoring decisions of European companies, while exports should improve in the second half of this year.

 

The new government clashes with the President

The latest parliamentary elections held in October 2023 once again gave the largest number of votes to the Law and Justice party (right-wing conservative, PiS). President Duda reappointed Mateusz Morawiecki from that party as candidate for Prime Minister (PM) as he won the most votes. However, he did not survive the vote of confidence in Sejm as the opposition coalition comprising Civic Coalition of (KO, liberals), Third Way (centre-right) and Left (left-wing) have 248 seats in the 460-member Lower House of Parliament. Donald Tusk, the already twice-serving Prime Minister, ex-President of European Council (2014-2019), and leader of KO was appointed PM. His government is seen as EU-oriented and willing to improve relations with the European Commission, which immediately translated into better market sentiment for Polish currency and bonds after elections results. The EU already approved over EUR 5 billion in grants and loans to Poland in December 2023. Furthermore, in February 2024, the European Commission announced it would unlock funds (Cohesion as well as the Recovery and Resilience Facility) that were frozen due to the previous government’s conflict with the European Commission over the erosion of the rule of law. Disbursements include the access to EUR 135 billion which could be used over the next years, with only partial usage in the course of 2024. So far, the government is progressively fulfilling its reform agenda due to clashes with President Andrzej Duda, who is nominally unaffiliated, but originates from PiS. The President holds a power of veto and defers legal acts to the Constitutional Council with some judges having been appointed by PiS, which is hampering the new government's policy effectiveness, especially since the coalition lacks the required number of votes to sidestep it. These quarrels could last till the next Presidential election in mid-2025 when a liberal candidate could well make it to the presidency. Before that, local and EU elections are scheduled in April and June 2024, respectively.

 

Last updated: March 2024

Payment

 

Standard bills of exchange and cheques are not widely used, as they must meet a number of formal issuing requirements in order to be valid. Nevertheless, for dishonoured or contested bills and cheques, creditors may resort to fast-track procedures resulting in an injunction to pay. There is, however, one type of bill of exchange that is commonly used – the weksel in blanco. This is an incomplete promissory note bearing only the term “weksel” and the issuer’s signature at the time of issue. The signature constitutes an irrevocable promise to pay, and this undertaking is enforceable upon completion of the promissory note (with the amount, place, and date of payment), in accordance with a prior agreement made between the issuer and the beneficiary. Weksels in blanco are widely used as they also constitute a guarantee of payment in commercial agreements and the rescheduling of payments.

Cash payments were commonly used in Poland by individuals and firms alike, but under the 2018 Business Law Act (Ustawa – Prawo przedsiębiorców), companies are required to make settlements via bank accounts for any transaction exceeding the sum or equivalent of 15,000 Polish złotys even when payable in several instalments. This measure has been introduced to combat fraudulent money laundering.

Bank transfers have become the most widely used payment method. Following phases of privatisation and consolidation, Polish banks now use the SWIFT network. 

Debt collection

Amicable proceedings

Amicable debt collection is the first step of the debt recovery procedure in Poland. These actions include reminders and/or demands for payment. These communications usually serve to obtain repayment of outstanding debt, to warn the debtor of further official actions, to obtain acknowledgment of the debt, to conclude an agreement between the creditor and the debtor based on the acknowledgment of its debt and to obtain a commitment to the repayment agreed.

As of 2004, interest can be claimed as from the 31st day following delivery of the product or service, even where the parties have agreed to longer payment terms. The legal interest rate will apply from the 31st day until the contractual payment date. Thereafter, in the case of late payments, the tax penalty rate will apply. This is very often greater than the legal interest rate, unless the contracting parties have agreed on a higher interest rate.

A bill to implement the 2011/7/EU directive of 2011 on “combating late payment in commercial transactions” provides the contracting parties with maximum payment terms of 60 days. Similarly, default interest is due the day after the deadline, without the need for a formal notice. By implementing the EU Directive, Poland introduced new rules regarding compensation for payment defaults in commercial transactions. These rules oblige debtors to pay the costs of recovery when the payment term expires. The defined amount is a lump sum of €40 – but it is possible to demand a larger amount if the costs of recovery prove to be higher.

 

Legal proceedings
Fast-track proceedings

Creditors can seek an injunction to pay (nakaz zaplaty) via a fast-track and less expensive procedure, provided they can produce positive proof of debt (such as unpaid bills of exchange, unpaid cheques, weksels in blanco, or other acknowledgements of debt). If the judge is not convinced of the substance of the claim – a decision he alone is empowered to make – he may refer the case to full trial.

As since 2010, the district court of Lublin has jurisdiction throughout Poland to handle electronic injunctions to pay when claims are indisputable. The clerk of the court examines the merits of the application, to which is attached the list of the available evidence. He then, using an electronic signature, validates the ruling granting the injunction to pay. This procedure appears, at first glance, to be fast, economic and flexible, but in reality the sheer number of cases mean that this process can be slow and drawn out.

 

Ordinary proceedings

Ordinary proceedings are partly written and partly oral. The parties file submissions accompanied by all supporting case documents (original or certified copies). Oral pleadings, with the litigants, their lawyers, and their witnesses are heard on the main hearing date. During these proceedings the judge is required to attempt conciliation between the parties.

Standard court procedures can be also fast and effective when the creditor can provide documents that clearly show the amount of debt and the confirmation of delivery of goods (or proper performance of services), especially if the documents have been signed by the debtor. The court issues an order for payment which states that the debtor should pay the amount of the debt in two weeks, or return a written argument within the same period of time. However, in standard procedures, it is quite easy for the defendant to postpone the case. When the defendant argues the order of payment during this kind of procedure, it can take a long time to obtain the final verdict, due to the lack of judges and large backlog of cases. 

Enforcement of a legal decision

When all appeal venues have been exhausted, a judgment becomes final and enforceable. If the debtor does not comply with the judgment, the creditor can request that the court orders a compulsory enforcement mechanism of the decision, through a bailiff. For foreign awards rendered in an EU country, specific enforcement mechanisms such as the EU Payment order or the European Enforcement Order can be used for undisputed claims. Awards rendered in non-EU countries are recognised and enforced, provided that the issuing country is party to a bilateral or multilateral agreement with Poland. 

Insolvency proceedings

Restructuring proceedings

The 2015 reform on polish insolvency law introduced four new types of restructuring proceedings which aim to avoid the bankruptcy of insolvent or distressed businesses.

The “arrangement approval proceedings” is available to debtors who are able to reach an arrangement with the majority of creditors without court involvement and where the sum of the disputed debt does not exceed 15% of total claims. The debtor will continue to manage its estate but it will be required to appoint a supervisor, who will prepare a restructuring plan. The creditors approve the proposal through a vote.

Accelerated arrangement proceedings are also available if the sum of the disputed debt does not exceed 15% of total claims. The procedure is simplified in relation to the allowance of claims carrying voting rights. Creditors can only make reservations via a list of claims prepared by the court supervisor or administrator. The debtor’s estate will continue to be managed by the debtor-in-possession, but a court supervisor will be appointed to supervise its management.

The “standards arrangement” proceeding is available for disputed debts exceeding 15% of the total claim. With these proceedings, the court secures the debtor’s estate by appointing a temporary court supervisor.

“Remedial” proceedings offer the broadest restructuring options and scope of protection of the debtor’s assets against creditors. The appointment of an administrator to manage the debtor’s estate is mandatory.

 

Bankruptcy proceedings

Bankruptcy proceedings can only be declared when a debtor has become “insolvent”. There are two test of insolvency – the liquidity test and the balance sheet test. Both aim to liquidate the estate of the bankrupt company and distribute the proceeds among its debtors. The entire procedure is court-driven, although the 2015 reform has given creditors holding major claims a right to influence the Polish anti-crisis legislation (so called “Anti-Crisis Shield”) to a small extent affects issues related to cash receivables in business-to-business relations, although the exception here are receivables resulting from lease contracts in commercial facilities over 2000 square meters. In this respect, the obligation to pay the rent was temporarily suspended for the full-lockdown period.

 

COVID – 19: 

The most important solutions introduced by this legislation concern bankruptcy proceedings thus the responsibility of management board members for failure to file a bankruptcy petition was suspended. This resulted in a decrease in the number of bankruptcy petitions (instead of the expected increase) in the initial phase of the pandemic. Anti-Crisis Shield also announced a new type of restructuring procedure, namely the simplified restructuring procedure. This procedure is similar to the procedure for approval of an arrangement, which has not been popular so far. The opening of this procedure is associated with undoubted privileges for the debtor, such as the suspension of creditors' obligations for a maximum period of four months while the court approves the arrangements made with creditors.  During this period, it is impossible for the creditors to terminate contracts or to start enforcement procedures titles (like court judgements or payment orders). It is all linked with a minor restriction in managing the debtor’s company. So far, we observe a certain number of these proceedings being opened.

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