Economic studies
Poland

Poland

Population 38.0 million
GDP 14,411 US$ billion
A3
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Synthesis

major macro economic indicators

  2013 2014 2015(f)  2016(f)
GDP growth (%) 1.3 3.3 3.5 3.3
Inflation (yearly average) (%) 0.8 0.1 -0.7 1.2
Budget balance (% GDP) -4.0 -3.3 -2.8 -3.0
Current account balance (% GDP) -0.9 -1.1 -0.2 -1.0
Public debt (% GDP) 55.9 50.4 51.5 52.4

 

(f) Forecast

STRENGTHS

  • Market of 38 million inhabitants
  • Close to Western European markets
  • Price-competitiveness/qualified and inexpensive workforce
  • Integrated into German production chain
  • Primary beneficiary of European structural funds
  • Diversified economy (agriculture, various industries, services)
  • Resilient financial sector
  • Coal resources

WEAKNESSES

  • Insufficient investment / Insufficient domestic savings
  • Low levels of research and development
  • Development in the eastern regions lagging behind
  • Rigid labour market favouring the shadow economy estimated at 23%
  • High level of structural unemployment and low employment rate for women
  • Lack of competition
  • Low birth rate

RISK ASSESSMENT

Dynamic growth driven by domestic demand

Growth is expected to keep its momentum in 2016. Household consumption will continue as the main contributor, with rising employment and income levels benefitting from higher wages, low inflation and, probably, several fiscal measures. Investment could slow slightly. Infrastructures will suffer from the transition between two European funding programmes. Businesses could restrict their spending while waiting for the decisions on tax and credit.  By contrast, the housing market will benefit from households’ confidence and low interest rates. Exports (cars, machines, domestic appliances, consumer electronics, agri-food, furniture, ships, building components) are expected to maintain a steady growth rate. The slowdown in the emerging markets will be counterbalanced by moderate growth in the euro zone. The dollar's appreciation against the zloty will boost sales outside the euro zone. Nonetheless, there is some uncertainty over exports from the three Volkswagen plants, which account for 1/3 of local automotive output. The number of insolvencies could fall by 5% (after -8% in 2015), except in a few sectors such as road transport and the wholesale trade, hit by the problems in Russia, competition from south-east Europe and the shorter distribution circuits.

 

Loosening of economic policy looms

Despite an accommodative fiscal policy since the start of the crisis, public debt has increased modestly. Almost three-quarters of outstanding debt are denominated in zlotys. Moreover, net debt represents only a quarter of GDP. Nonetheless, its proportion is rising slightly each year. An effort equivalent to 2% of GDP would be needed to bring the primary balance (i.e. excluding interest on the debt), currently at 1%, to a level where it could be stabilised. The coming to office of the new government is likely to be accompanied by further relaxation. The electoral promises included the introduction of child benefit from the second child for low-income families, a rise in the tax threshold for households, lower VAT, state aid for the restructuring of loss-making mines, cancellation of the gradual increase in the retirement age, lowering of corporation tax for SMEs from 19% to 15% to offset the introduction of the minimum wage. There is also the planned conversion into zlotys of mortgages denominated in Swiss francs, initiated by the previous government (about 30% of household borrowing and 8% of GDP), of which a fraction of the cost could be borne by the State. It is likely that only a fraction of these proposals will be implemented in 2016, most occurring in 2017. The country has set itself strict fiscal rules. There is limited leeway given that the country does not want to fall back under the European excessive debt procedure which it has only just succeeded in exiting. To raise resources, the government is planning to introduce a 0.39% tax on bank assets, 60% of which are held by foreign groups, and a 2% tax on sales for stores with a surface area greater than 250m2. Despite this, the deficit is expected to increase in 2017. Moreover, it intends to entrust to the central bank the task of arranging zero-interest financing for the disadvantaged regions and the mining sector in addition to those of the three state-owned banks, all of which together could account for 70% of annual GDP in six year's time.

 

External accounts almost balanced

The balance in the trade of goods is oscillating around equilibrium, while the services balance shows a slight surplus (of about 2% of GDP) thanks to tourism and international road transport, together with remittances resulting from the increased presence of Polish workers in Western Europe. By contrast, the income balance is running a deficit leading to a slight current account deficit, amply funded by European structural funds, while new foreign direct investments contribute the equivalent of 2% of GDP, bringing an additional boost to an inventory representing 50% of GDP and a mark of the country's involvement in the European production chain. External debt represents about 70% of GDP. 43% of the total corresponds to government liabilities, 40% to business liabilities and the remainder to banks’ liabilities to their parent companies. Over half is denominated in euros.

 

Return to power of populist conservatives

With 235 seats out of 460 in the Diet and 61 out of 100 in the Senate, the coalition controlled by the conservative, populist and euro-sceptical Law and Justice Party (PiS), headed by Jaroslaw Kaczynski, won the October 2015 parliamentary elections, defeating the liberal, centre-right Civic Platform Party (PO) which had been in power for eight years. The left is no longer represented. Prime Minister Beate Szydlo's government can count on the support of the President, elected from its own ranks. Further, the two chambers and the president will replace eight of the ten members on the monetary policy committee whose term of office ends in June 2016. This will help to change economic policy. However, the government does not have a large enough majority to amend the constitution and needs the backing of three small parties, including a liberal party with 8 seats, without which it would no longer have a majority. 

 

 

(Last update : January 2016 )

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 and protested bills and cheques, creditors may resort to a fast-track procedure resulting in an injunction to pay.

However one kind of bill of exchange is commonly used - it is thewekselin blanco, 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 (amount, place and date of payment) in accordance with a prior agreement between issuer and beneficiary.

Wekselsin blancoare 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 “Freedom of business activity Act” (Ustawa o swobodzie działalności gospodarczej), of 2 July 2004, which came into force on 21st August 2004, companies are required to make settlements via bank accounts for any transaction exceeding the equivalent in złotys of 15,000 Euros even when payable in several instalments.

 

This measure aims to counter fraudulent money laundering.

 

Bank transfers have become the most widely used payment method. Leading Polish banks – after an initial phase of privatisation and a second phase of concentration – use the SWIFT network, which offers a cheap, flexible and quick domestic and international funds transfer service.

 

Debt collection

 

Standard court procedure can be also fast and effective when creditor can provide documents from which clearly shows the amount of debt and the confirmation of delivery of the goods (or the proper performance of services) – especially documents approved (signed) by the debtor.

Court issues an order of payment which states that debtor should pay amount of debt in two weeks or set an written argue (in the same period of time). When order of payment is not argued and becomes enforceable court gives back ¾ of court fee paid by creditor with lawsuit (5% of the amount in dispute).

However in standard procedure it is quite easy for defendant to postpone the case. When defendant argues at the order of payment in this kind of procedure than it can take a long time before final verdict due to the lack of judges and large number of cases held in courts.

 

Since the term of limitation for receivables arising from a merchandise sales contract, and any ensuing past-due interest, is only two years, suppliers should exercise extreme vigilance.

 

From 1st January 2004, interest may be claimed as of the 31st day following delivery of the product or service, even where the parties have agreed to a longer payment time. The legal interest rate will apply from the 31st day until the contractual payment date.

Thereafter, in case of late payment, the tax penalty rate will apply and it will very often be higher than the legal interest rate, unless the contracting parties have agreed on a higher interest rate.

 

A Bill to implement the directive 2011/7/EU of 16 February 2011 on “combating late payment in commercial transactions” provides between the contracting parties a maximum payment term of 60 days. Similarly, default interest will be due the day after the deadline, without the need for a formal notice.

 

Implementing EU Directive, Poland introduced new rules regarding compensation for payment default in commercial transactions. The Act (Ustawa z dnia 8 marca 2013 r. o terminach zapłaty w transakcjach handlowych (Dz.U. 2013 nr 0 poz. 403)) imposed on debtors to pay the costs of recovery when the payment term expires. This amount is 40 euros - lump sum and it is possible to demand a larger amount if the costs of recovery will prove to be higher.

 

It is also advisable to seek an out-of-court settlement based on a payment schedule drawn up by a public notary, which includes anenforcement clausethat allows creditors, in the event of default by the debtor, to go directly to the enforcement stage, subject to acknowledgement by the court of the binding nature of this document.

 

Creditors may seek an injunction to pay (nakaz zaplaty) via a fast-track and less expensive procedure, provided they produce positive proof of debt (like unpaid bills of exchange, unpaid cheques orwekselsin blanco, or else 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.

 

Since 1st January 2010, when the claims are certain, the district court of Lublin has jurisdiction throughout the country, to handle electronic injunctions to pay.

The clerk of the court examines the merits of the application, to which is attached the list of the available evidence, then, with its electronic signature, he validates the ruling granting the injunction to pay.

This procedure appeared to be fast, economic and flexible but it turned out that it can be quite opposite due to enormous amount of cases which are conducted.

 

Ordinary proceedings are partly in writing with the parties filing submissions accompanied by all supporting case documents (original or certified copies) and partly oral with the litigants, their lawyers, and their witnesses heard on the main hearing date.

 

At such legal proceedings, the judge is required, as far as possible, to attempt conciliation between the parties.

 

Although each party bears his own legal costs incurred in the course of the proceedings, after making a ruling the court will generally require the losing party to bear most of the cost of the procedure.

 

Commercial disputes are generally heard by the economic courts (sąd gospodarczy), falling under the jurisdiction of either district courts (sąd rejonowy) or regional courts (sąd okręgowy), depending on the value of the claim.

 

*It is important to be noted that in 2016 the new regulation on bankruptcy proceedings enters into force. It is called restructuring law and will be based on two basic principles: protecting the legitimate rights of the debtor and the rules of dominance group (collective) interests of the creditors. The purpose of the Act is to be at the same time to avoid declaring bankruptcy by debtor and allowing him to restructure through an arrangement with creditors, and in the case of the rehabilitation proceedings also by carrying out the remedial action, whilst safeguarding the legitimate rights of creditors.

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