Why is foreign direct investment implemented?

Perspectives for Foreign Direct Investment

Poland will experience its first recession since 1991 due to the corona crisis in 2020. The national bank of the country (Narodowy Bank Polski; In its forecast published in July 2020, NBP expects a decline in gross domestic product (GDP) of 5.4 percent for 2020 as a whole. According to the European Commission, the slump in Poland will be the lowest compared to the other member states of the European Union (EU). You can find out more about this in the Economic Outlook Poland.

With 38 million inhabitants, Poland is the largest EU member state in Central Eastern Europe. It generates 40 percent of the region's GDP. In addition to the large domestic market, the country can score points with foreign investors thanks to a diversified structure of suppliers and well-trained and motivated specialists. A more detailed analysis of the strengths and weaknesses of the market can be found in the Poland SWOT analysis.

Rental price development in Poland (in euros per square meter / month)

indicator

2018 1)

2019 1)

2020 2)

Rent for office space in the center of the capital

Class a

20,5-23,5

20,5-24

20,5-24

class B

15-19

15-19

15-19

The GTAI also provides you with data on the Wage and non-wage costs to disposal.

Future trends: The number of FDI projects is increasing despite the corona crisis

Poland is one of the few countries that, despite the corona crisis, has seen an increase in investment projects from abroad (Foreign direct investments; FDI). This is shown by a study by fdi Intelligence, an analysis company of the Financial Times Group. Real estate projects, which account for most of the investments in Poland, are also taken into account. 165 FDI ​​projects were announced between January and April 2020. In the same period of the previous year there were 145. Reason for the increase: Investors were particularly active in the renewable energies sector. Fdi Intelligence counted 16 such projects in the first four months of 2020. In the same period of the previous year 2019, there was one project.

Poland is becoming an investment hotspot for electromobility

Poland's State Investment and Trade Agency (Polska Agencja Inwestycji i Handlu; PAIH) has accompanied fewer projects so far in 2020. According to its own estimates, it looks after around 30 percent of all projects by foreign investors in Poland. In the period from January to June 2020, PAIH completed 16 projects, only half as many as in the previous year. With an investment value of 1.14 billion euros, the agency reported an increase of almost 60 percent compared to the same period in the previous year. The majority of the sum (880 million euros), however, goes back to a single investment by Microsoft. According to Grażyna Ciurzyńska, President of PAIH, some of the investment decisions planned for the 2nd quarter of 2020 have been postponed to the 3rd and 4th quarters.

As early as 2019, PAIH reported a decrease in the number of projects with a simultaneous increase in the investment amount. The number of projects fell from 70 to 56, the total investment increased from 2.1 billion euros to 2.9 billion euros. In terms of foreign investments in Poland in 2019, the area of ​​electromobility stands out. With 2.1 billion euros, more than 70 percent of the total investment volume of the settlement projects managed by PAIH came from this sector.

Corona crisis could further boost business services projects

PAIH is observing another trend: The number of investments in business services, such as business process outsourcing (BPO) and shared services as well as contact centers, is growing continuously. In 2019 alone, 20 investment projects came from this area (2018: 15). Measured by the number of projects, it was the most active sector in terms of foreign direct investment. In the first half of 2020, eight further investment projects in this area, supervised by PAIH, were implemented. Although the result was lower than in the previous year (14 projects), more jobs were created in 2020. As PAIH reports, almost half of all jobs in business services (536 jobs) were created in research and development centers. In the same period of the previous year there were around 400 positions.

According to its own statement, PAIH is currently in charge of 43 other projects in the business services area. Some could be completed later this year, according to the agency. Jacek Levernes, Honorary President of the Polish Association of Business Services Executives (Związek Liderów Branchea Usług Biznesowych; ABSL), forecasted the daily Rzeczpospolita in July 2020 that the corona crisis could accelerate the development of the Polish business services sector. Poland would benefit from companies looking for savings opportunities around the world. A similar development could already be observed after the financial crisis in 2008.

In connection with the crisis, the country could also benefit from possible nearshoring investments by European companies in order to prevent the risk of interrupted supply chains in the future. For example, Jan Barbasiewicz, partner and director of the department for logistics and industrial premises at Colliers International, reports on increasing inquiries on this topic.

According to the expert, the electrical industry in particular has increasing interest in Poland as a production location. Most inquiries are about storage space, but the companies are also interested in space for assembly or production systems, Barbasiewicz told the business newspaper Puls Biznesu.

Foreign direct investment in Poland (in billion euros)

indicator

2016

2017

2018

Cumulative inventory

178,3

200,6

199,8

Net transfers

14,2

8,1

11,8

German direct investment in Poland (in million euros)

indicator

2017

2018

2019

Cumulative inventory

34.177

34.764

n / a

Net transfers

3.082

1.869

2.365

Largest German investors in Poland (by sales 2018)

Companies

Branch

Lidl

retail trade

Volkswagen Poznań

Automobile production

Kaufland

retail trade

Rossmann

retail trade

Mercedes Benz (Daimler)

Automobile production

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