Scotsman Guide > Commercial > June 2018 > Department

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Commercial Department: Beyond Our Borders: June 2018

 

Beyond Our Borders

Poland, which regained its independence in 1989 after decades of being ruled by the Soviet Union, today possesses the eighth-largest economy in the European Union (EU). But an aging workforce and low fertility rate threaten to thwart the economic progress the country has made in recent years.

Overall, Poland’s gross domestic product (GDP) grew 4.6 percent in 2017, fueled mostly by a 4.8 percent increase in private consumption in the first half of 2017, according to the World Bank. The rise in consumer spending was largely a byproduct of the implementation of the 500-plus program, which was implemented in April 2016 and aims to battle child poverty by providing financial support to parents, according to a report from Colliers International.

The country’s real GDP is forecast to grow by 4.2 percent in 2018 and 3.6 percent in 2019, according to a European Commission report. That would put Poland’s GDP growth among the highest in the EU. Additionally, the country’s minimum wage increased 8 percent in 2017, and the boost in pay is expected to increase the income of Poland’s lowest wage earners, according to the World Bank.

Poland’s commercial real estate market experienced a record year in 2017, with its industrial, office and investment sectors proving especially robust, according to the Colliers report. Investment in Poland’s commercial property market saw the highest transaction volumes in years in 2017, with the combined value of commercial property investments for the year totaling 5.3 billion euros (about $6.6 billion), according to the Warsaw Business Journal.

Despite an overall solid economy, the country faces a number of challenges, including the fact that its population is one of the most rapidly aging in Europe, resulting in a shrinking workforce and increased strain on the country’s health care and pension systems, according to the World Bank. Poland’s seniors — citizens age 65 or older — currently represent 15 percent of the total population, which is actually 3 percentage points below the EU’s average, according to the International Monetary Fund. The problem, however, is that the country’s senior-age ratio is projected to more than double by 2050, putting it well above the EU average.

Compounding the problem is the country’s fertility rate, which is among the lowest not only in the EU, but in the world. The country is taking some steps to address the fertility problem, such as the aforementioned 500-plus program.

Additionally, the country’s deficit is set to widen between 2018 and 2019 to around 2.6 percent to 2.7 percent of GDP, although that’s still below the 3 percent limit set by the EU, according to the World Bank. The increased deficit is the result of higher spending stemming from a rollback in the retirement age as well as higher co-financing of EU-sponsored capital spending, the World Bank states.


 

Steven Wyble is the former online content editor of Scotsman Guide Media. For questions about this article, call (800) 297-6061 or articles@scotsmanguide.com.

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