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Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 187,670 176,300 157,600 22
GNI per capita
 US $ 4,570 4,230 4,170 71
Ranking is given out of 208 nations - (data from the World Bank)


Area ( 





Private sector 
% of GDP 


Poland regained its independence in 1918 only to be overrun by Germany and the Soviet Union in World War II. It became a Soviet satellite country following the war, but one that was comparatively tolerant and progressive. Labour turmoil in 1980 led to the formation of the independent trade union "Solidarity" that over time became a political force and by 1990 had swept parliamentary elections and the presidency. A "shock therapy" program during the early 1990s enabled the country to transform its economy into one of the most robust in Central Europe, boosting hopes for acceptance to the EU. Poland joined the NATO alliance in 1999. 

Update No: 076 - (28/08/03)

The Poles are in peril, but also with hope, they are set to join the EU as the leading candidate country in the first wave of accession. Yet this could have a highly disruptive impact, even if a galvanic one. Small farmers and miners face going to the wall.
The Poles did something unusual in the summer of last year. They voted back in the communists. Of course they are no longer communists in the old sense. Indeed their assumption of office was welcomed in Brussels and even by the Wall Street Journal. So times have changed!
The new government under veteran communist politico, Premier Leszek Miller, do not have the political baggage of the Solidarity bloc, the former team in power, which was wiped out at the polls, failing to get even the 5% required for representation in parliament. Solidarity was attached to the trade unions and the old smoke-stacked industries, while its Agrarian Party allies were to the cause of the numerous small-scale peasantry. The ex-communists had time to think in opposition and now espouse broad reform policies, but `with a human face,' something not unlike Tony Blair's `Third Way.'
As a sign of the new times Putin came to town in late January, the first Russian leader to do so for eight years. Relations are improving, with both sides keen to see a US$3.5bn trade deficit, which Poland sustains with Russia, reduced. Polish businesses are to be welcomed into Russia, which supplies it with most of its energy in the form of natural gas. Nevertheless there are outstanding issues in contention, the Poles being in negotiation with the Danes and Norwegians over alternative sources of natural gas.
Poland remains in a quandary. By the standards of other countries in transition it has been doing well. But the population at large are far from satisfied and are decidedly apprehensive at the prospect of entry into the EU, which is looming ahead. GDP growth was averaging more than 5% per annum for years in the 1990s. But in 2001 growth was only 1.5% and in 2002 a predicted 2.5% might prove to be unduly optimistic; indeed 1% is now the generally anticipated outcome. A resumption of 5% growth is not now expected until 2004.
The most disgruntled of the population are naturally the unemployed, who amount to 17.4% of the work force, according to the latest figures in December, the worst since the collapse of communism in 1989.A World Bank report released in late January noted that the creation of new firms, usually with less than 50 employees, holds out the best hope of growth and the formation of new jobs. The bank is extensively involved in helping finance restructuring in Poland.
Poland is sure to be among the first entrants to the EU, most people assume, but there is one grave problem. The Poles have an inordinate fear of foreigners buying their land, which in earlier centuries led to national disaster, Poland losing its very independence for two centuries. The new government, like its predecessor, is sticking in its heels at allowing foreigners to buy land in Poland, at least for 18 years. The other entrants have all complied with EU norms in this respect, agreeing a seven-year transition period, but not Poland. An opinion poll in July showed three-quarters remaining adamant in support of an 18-year moratorium, even if this delays EU membership.
The government may be holding out for a compromise of say 10-12 years, a marked concession recognising Poland's special status as easily the largest applicant country and historically the most wronged. The symbolic impact of Poland not being in the first wave would be outlandish. Some sort of deal is highly likely.
The basis of such an agreement is open due to the fact that the EU itself wants to delay offering full agricultural and regional aid to accession states only after 10 years, whereas Polish farmers would naturally like to see the money flowing their way much sooner. A deal needs to be done ahead of a referendum on entry in 2004. Pools show 60% in favour right now. A historic concession to the Poles over land ownership seems clearly called for by Brussels.

Facing up to Iraqi war differences
Poland and Germany fell out over the Iraqi war, but attempts are now being made to overcome their differences. Polish Defence Minister, Jerky Szmajdzinski, has visited Berlin to meet his German equivalent, Peter Struck, to sign agreements on bilateral technical projects to modernize Polish defence equipment, notably MiG-27 fighter jets and German Leopard 22 A4 tanks.
Poland received the equipment last year from Germany as part of a programme to raise its NATO operability. Szmajdzinski has also attended a forum "Impulse 21" on defence to deliver on transatlantic policy options after the Iraqi war.

EU problems ahead
It is not just with Germany and indeed, France, over Iraq that Poland is having difficulties, but with the whole European project which it is due to join next year in May. Negotiations are still in progress over contentious issues, such as the delay in Polish farmers receiving EU subsidies to the full extent of those of existing members.
A recent deterioration in the country's fiscal prospects have put a big question mark over its chances of joining the Eurozone anytime before 2010. This lowered its Standard & Poor's credit rating in late July to negative, even while affirming the country's BBB plus/A-2 foreign currency and A/A-1 local currency ratings.
"The outlook revision reflects a deterioration of Poland's medium-term fiscal prospects, in view of increased fiscal pressures going forward and political difficulties facing key fiscal reforms, S&P analysts said. Markets reacted with predictable distaste at the news. The zloty dropped a full percent against its former parity. S&P expects pressure on spending to grow in 2004, reflecting costs related to European Union membership and the ongoing costs of economic restructuring. 
At the same time, Poland is planning pressure of its own on the revenue side in the form of corporate income tax cuts rates. With no work on the spending side, the result will be a widening of the fiscal gap. S&P expects the general government deficit to exceed six percent of GDP in 2003 against three per cent in 2000, while the debt-to-GDP ratio will approach 50 per cent of GDP in 2003 from 39 per cent in 2000.
The outlook could prove grim if action is not taken. Poland may record general government deficit at seven per cent of GDP in 2004-2005, and a debt-to-GDP ratio in excess of 60 per cent of GDP by 2006 if no reforms are undertaken.
This would delay Poland's EMU accession to beyond 2010. The government expects Poland to join the Eurozone in 2007-2008. Analysts said the outlook could be revised to stable if the government pushes forward a coherent strategy of medium-term reforms to address the forth-coming fiscal challenges.

Other problems also douse prospects for EU success
Poland's future within the European Union also depends on its ability to strengthen the rule of law. In the corruption perceptions index put out by Transparency International and the governance index of World Bank's Danny Kaufmann, Poland lags behind its immediate neighbours. If Poland wants to attract the capital needed to grow, and to keep up its prospects of joining the Euro this decade, it needs to sell its state-owned companies more transparently and quickly than it has done recently.
The Polish government has sought to improve its dismal record on privatisation. Unfortunately, investors and reformers found little to reassure them that Warsaw is serious about cleaning up its act.
The most significant announcement made concerned the high profile privatisation of the country largest steel group, Polskie Huty Stali, or PHS. After protracted negotiations, the government chose the Anglo-Dutch steel maker, LNM Holdings, to negotiate a 75% stake in PHs, rejecting a rival bid from US Steel.
LNM Chairman, Lakshmi N Mittal, wants to close the deal by August. If his group succeeds in revitalising PHS and injecting much-needed cash into the Polish budget, LNM shareholders and Poles will have good reason to rejoice. US Steel still hopes it will get back in the game if LNM is unable to cut a deal. The fierce competition is understandable, since Eastern Europe produces rare profits for global steel makers.
For all these reasons, the Polish government needed to make this a model privatisation. But the sale instead raises uncomfortable questions about transparency and governance in Poland that need to be addressed urgently.
Potential bidders were confused by the procedures, which were repeatedly changed. Deadlines were moved too, or weren't enforced. It didn't help either, that Poland has had three treasury ministers, who are in charge of privatisation, this year alone. Before the announcement, US Steel executives complained that information about the secret bids appear in the Polish press. "Badly bungled," sums up Philip Poole, chief emerging markets economist at ING Barings, adding that "There's no consistency."
A whiff of possible corruption surrounded the sale too. In March, a Warsaw prosecutor opening an investigation into allegations that an associate of Deputy Treasury Minister, Andrzej Szarawarski, who was in charge of the negotiations, approached US Steel to solicit a bribe on the minister's behalf. Mr Szarawarski denies the charges. Yet he waited until a few days before the final (again moved) deadline for bids to remove himself from the case. Why didn't he act sooner?
There is still a lot Poland needs to do to raise its profile in Europe and make a success of its coming EU accession.

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US firm wins tender to deliver gas from Ukraine for Polish oil company

The US-registered company, Sinclair, won a tender to deliver 2bn cubic metres of gas for the Polish Oil and Gas Company Polskie Gornictwo Naftowe i Gazownictwo [PGNiG - Polish Oil and Gas Exploration], the Polish company announced in a communiqué, PAP News Agency has reported.
PGNiG declined to give details of the deal and delivery dates. The tender was announced on 23rd June.
Former PGNiG President, Michal Kwiatkowski, said before 23rd June that once the tender is successfully completed, gas - under spot agreements - would be delivered by the end of 2003.
Kwiatkowski did not rule out that more similar procedures will be announced in the future.
The gas is to be picked up by PGNiG at a supply terminal in Vysokoye (Polish-Belarussian) and/or Drosdoviche [Drozdovitse] on the Polish-Ukrainian border.

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Polish firm opens office in Baghdad

Bartimpex has become the first Polish company to have opened an office in Baghdad, Chief Executive Officer Aleksander Gudzowaty said on 13th August. "Our office there was opened four days ago now," he added, PAP News Agency has reported.
Gudzowaty also revealed that his company headed a consortium of 20 Polish firms and wanted to take part in large infrastructure projects.
The Baghdad office came into being as a result of cooperation with Arab firms, another Bartimpex official explained. "We act in many directions: through contacts in the USA, Britain and with local firms and these actions are taken independently," he said.
Asked about concrete plans for operations in Iraq, the official referred to Bartimpex's experience with oil pipeline construction under the Yamal project. "This makes us a suitable partner for similar tasks," he noted.

Polish company achieves third supply contract with NATO

Ster-Projekt has signed an agreement with NATO on the delivery of equipment and software for NATO computer systems. The value of the third contract with NATO is assessed at tens of thousands of euros, the company reported in a statement issued on 13th August, PAP News agency has reported.
Ster-Projekt did not disclose the actual value of the contract saying it is a trade secret, Magdalena Kubiak from the company said.
The first agreement with NATO was signed in mid-July and it provided for the creation of computer systems for NATO military bases. The second one provided for the delivery of an air defence system service.

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Poland brainstorms stronger moves to attract investments

Poland's government, led by Leszek Miller, and local companies are working together to forge a strong, national brand with the country's upcoming accession into the European Union. Doing so will help Poland draw in more investments and boost exports, according to Interfax News Agency.
"EU accession in 2004 will be the last moment to start a large-scale global promotion of Poland," Andrzej Zdebski, president of the newly formed Polish Agency for Information and Foreign Investments (PAIIZ), was quoted as telling a special conference. "The goal of such a campaign, is among other things, attracting to Poland US$8-10bn of annual foreign direct investment and increasing the share of exports in GDP to 40-50 per cent," Zdebski was quoted as saying.
Polish FDI currently stands close to the US$6bn mark, Interfax reported. The special conference's main aim was to ensure the development of a national marketing programme. PAIIZ, the Polish Chamber of Commerce, the Institute of Polish Brand and the Economy and Labour Ministry jointly hosted it. The focus of the programme is to coordinate the activities of all institutions involved in the global promotion of Poland and in the end to improve the state's image both abroad and among its own citizens. Enterprises are pushing forward with their efforts, establishing "Brand Company" certificates and nominating firms with leading export products to join the Academy of Brands.

IBM plans to invest US$100m into region

IBM Polska is keen to exploit the growth potential of the EU accession countries and invest US$100m (zl.387m) into the region over the next three years, most of which, it is thought, will be spent in Poland. The first step in the implementation of the strategy seems to be changing the company's president, Warsaw Business Journal has reported.
According to Barbara Soha, public relations officer at IBM, the company would not be able to comment on its expansion plans until September, as management board members are on holiday. As of September 1st, Gozegorz Tomasiakis to be replaced at IBM Polska's president by Dariusz Fabiszewski, former head of Fujitsu Siemens Computers.
"Poland is a good case in point showing that the emergent markets (division of IBM) is a high-growth area," said Ana Glisic-Liarakos, communications manager for IBM Central and Eastern Europe, Middle East and Africa (CEMA). "We have had a continuous strategy of investment in the region and the new plans are merely an extension of that."
The official explanation for the investment is that the market is expected to grow following the European Union accession. Unofficially, however, the real reason is that this is the only region in Europe where IBM is not a market leader. The company has a 5.9 per cent market share, as opposed to Hewlett-Packard (HP)'s 14.3 per cent.
IBM's purchase of Pricewaterhouse Coopers Consulting has been hailed as a positive step, allowing the company to offer an integrated package of services that will improve the finances of both its consulting and IT services. These areas have been the business's weak points. As Steve Milunovich, chief technology strategist at Merrill Lynch, put it, the client now "has one throat to choke."
Market experts see this as the area where IBM has the most growth potential in Poland as well as internationally. But since the leader on that market segment is HP, increasing IBM's market share may prove difficult, said Jarek Smulski, IT analyst at market research company, IDC.
According to Glisic-Liarakos, most of the growth is expected to come from new, technologically advanced services.
"The experience of previous entrants shows that accession to the EU leads to increased requirements, as extra business infrastructure is necessary," Glisic-Liarakos said.
Michal Rogalski, deputy president of the Polish Chamber of Information Technology and Telecommunications (PIIT), echoed the sentiment.
"As the business environment becomes more competitive following accession, so the pressure on improved operational efficiency will increase," he said. He predicts that the market for IT services for small and medium-sized enterprises will grow faster than other market segments in the coming years.
That is the sector where IBM is looking to expand with a range of new products, tailor-made to the needs of smaller clients. In response, however, HP has also made public its plans for expansion in the sector.
Experts are doubtful about some of the points of IBM's strategy. Even as the company started the first wi-fi "hotspot" or wireless Internet access at Warsaw's Novatel airport hotel, experts have begun to talk of "another Internet bubble."
"Each new technology creates new needs," Rogalski said, commenting on the hopes that the demand for new products could drive the market for IT products in the country. Experts point out that it was that very logic that led to the late 1990s crash. According to Daniel Sweeney of consultancy, Forward Concepts, such hopes lead to "a shaky foundation for a telecommunications business."
IDC experts are more optimistic, saying that the market for wireless access is a "prospective one." They point out, however, that it is difficult to say to what extent it could play a role in the revenues of a large company like IBM.

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Softbank to supply major bank in Russia with IT system

IT company, Softbank, has signed a contact worth 10m zlotys (2.2m Euro) with Bank Dialog-Optim in Moscow, one of the larges banks in Russia, for the implementation of an IT system, Bluebull reported.
Earlier Softbank said that it might look for new markets for its IT system, currently being introduced in bank Gospodarki Zywnosciowej (BGZ).

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US steel shows interest in purchase of Polish Steel Mills

America's largest steel-maker, US Steel, remains interested in purchasing Polish Steel Mills (PHS) despite the fact rival LNM Group, the world's second-biggest steel producer, won recently the exclusivity to bargain a final deal until August 22nd, US Steel said in a statement, Interfax News Agency reported. Polish Treasury Minister, Piotr Czyzewski announced the result of the tender during a news conference in which he also invited US Steel to renew its offer and promised to hold talks with the Americans should a deal with LNM prove elusive.
US Steel, though it expresses continued interest, has not yet decided whether to prolong its offer until the end of August. "We still deeply believe that United States Steel Corporation would be the best strategic partner for Poland and the Polish steel industry," US Steel president, Roy Dorrance said. US Steel said it had not yet made a decision concerning further steps in the ongoing corruption probe into its allegations, brought to a local prosecutor, that Andrzej Szarawarski, the former deputy treasury minister responsible for PHS's sell-off, had solicited money from the Americans via a shell company.
LNM said recently that it wants to sign a sales purchase agreement before the August deadline and finalise the transaction by the end of 2003.
Poland is asking an investor to buy out at least 1.6bn zlotys of PHS's debt, fund a roughly US$150m capital rise, accept the terms of Poland's steel support program agreed with the EU, sign a workers' benefit deal and take the state's shareholdings on an agreed timetable.
PHS is a holding of four of Poland's largest steel producers that account for over two thirds of the country's annual steel production. The group, making over six million tons of steel a year, comprises the number one mill, Huta Katowice (HK), the number two mill, Huta Sendzimir (HTS), and the smaller Florian and Cedler mills.

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Polish 2004 privatisation plans revealed

Privatisation revenues are to come in at around 9.2bn zlotys in 2004, of which about 7bn zlotys are to be used to finance the budget deficit, according to a document titled "Privatisation directions in 2004" presented by a government source. The Treasury Ministry intends to sell around 100 companies, PAP News Agency has reported.
The source said that the government had not to-date determined which companies are to be sold. "It may be PZU [insurer], PKO [bank] or the power sector," the source said.
The State Treasury Minister Piotr Czyzewski said on 30th July that a 20 to 25 per cent stake in the PKO BP bank would be sold in a public offer.
Czyzewski added that he would start talks with Eureko on resolving a conflict around PZU late in August.

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Polish shipyard yard to build five ships under US offset arrangements

The SSN shipyard of Szczecin will build five ships under an the offset agreement with US Lockheed Martin, marketing director, Andrzej Zarnoch, said on 5th August. The project will be implemented starting in 2006, he added, PAP News Agency has reported.
The vessels, two standard container ships and three innovative ships that can be converted into ro-ro units capable of carrying heavy vehicles, will be ordered by a German ship-owner.
Zarnoch declined to reveal the value of the contract.
The US concern will take care of the financial side of the contract, he said. The Lockheed Martin Group will most likely guarantee credits that the SSN yard will draw in banks.
Last April, SSN officials declared that the company made an offer to build six ships under the offset arrangements. They were to be standard cargo vessels that could be converted to fulfil other functions as well, including military functions.

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Future brightens for mobile operators

Analysts are becoming more bullish on the country's mobile telecom sector, with some optimistically forecasting that customer-acquisition numbers will reach more than 4 million this year - a number that is especially high as the economy boasts so few other over-performing sectors, The Warsaw Business Journal has reported.
Market watchers recently lauded PTK Centertel's announcement that the company could reach profitability in the third quarter and is set to meet its revenue target of zl.4.3bn (968m Euro) for the year. They say the company, jointly owned by TPSA and France Telecom, is reflective of the entire mobile market, which is growing quickly primarily because the country has comparably low mobile penetration - around 35 per cent - and therefore a lot of potential.
"I think that it's very positive," said Michal Marczak, telecom analyst at BRE Bank, about the industry's outlook. "We have an even more optimistic forecast for Centertel."
He said that while Centetel figures its Idea mobile phone network will be able to acquire one million subscribers this year, he expects it to add some 200,000 above that level. Marczak added that he based his forecast on the fact the company already counted some 600,000 customers at mid-year without the lucrative Christmas season to come in the fourth quarter. "The fourth quarter is always the best quarter," he said, "So we think their estimates are conservative."
He explained that investors are sanguine on the entire sector, which also includes PTC operator of the Era mobile network and the largest player in the market, as well as Polkomtel, the operator of Plus GSM mobile network, which was recently relegated to third place behind Centertel. "The second quarter looks very strong for operators," he said, noting that the market generally expects PTC to maintain its leading market share while Polkomtel remains third.
"I expect that this year will be the best year for the mobile sector (in terms of subscribers)," Marczak said. He said the three operators are gradually taking advantage of the potential for customer growth. All told, he expects 4.1 million Poles to subscribe to mobile contracts this year.
Yet not everyone is as optimistic.
"Over 4 million? That's quite bullish," said Adrzej Kasperek, analyst at Citibank Handlowy. "I think the industry as a whole is doing quite well, but we don't have specific forecasts."
He explained that when looking at the overall economy, mobile operators seem to be stalwarts. But, he said, "I would consider some number under 4 million."
He said a possible exception in the industry might be Polkomtel, which he expected to continue to lose market share to its two competitors. "Polkomtel seems to be the laggard," he said. "They're losing some ground."

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