Poland Climbs International League Tables
September 28, 2012
The resilience of the Polish economy amid the crisis besetting Europe has impressed international institutions and think tanks. As a result, Poland has improved its position in league tables and attracted growing investor interest.
The crisis affecting the eurozone means that Poland has become more attractive to investors than many other European countries. And despite problems with its excessive public finance deficit, rising unemployment, and decelerating industrial production, Poland looks like an oasis of calm on a stormy ocean. This helps improve Poland’s image abroad and its position on the list of the most attractive countries for global business.
In a report printed in the August issue of the Brand Finance Journal, a publication by London’s Brand Finance Institute, which deals with brand management consulting, Poland was ranked among the 20 most valuable “nation brands.” In addition, Poland’s brand value proved to be the fastest growing in the world. The “Nation Brand 100” report was compiled based on an analysis of economic, demographic and political factors in individual countries.
Poland comes out as a star of the survey because it recorded a more than 74-percent increase in its brand value compared with the previous year. Poland’s brand value went up from $271 billion to $482 billion, and the country advanced from 24th to 20th place on the ranking list. The authors of the report attributed this success to Poland’s positive economic growth forecasts.
“Poland has seen the greatest percentage increase in brand value in 2012 due largely to the expected long-term GDP growth expectations,” the report reads. “Poland’s economy just keeps on growing. Poland is a major exception in the European Union—it hasn’t been affected by recession from the time of the first big crisis in 2008, quite the opposite. The risk profile in the Polish economy for 2012 is lower than in 2011 (discount rates of 10.9 percent and 12.1 percent respectively). The Brand Strength Index (BSI) for Poland has increased marginally in 2012 with an indexed score of 56 (55 in 2011).”
In an analysis by Brussels-based think tank Bruegel, Poland tops the list among 24 European Union countries in terms of stability and five key economic indicators: production, productivity, employment, developments on the labor market, and exports from 2008 to 2011. This result means that, practically speaking, production in Poland’s private sector as well as employment have not declined during the crisis. At the end of 2011, they were 14 percent and 3 percent higher respectively than at the beginning of 2008.
Potential investors are bound to take note of this data and the inflow of foreign direct investment to Poland may become even stronger, according to experts.
The latest investment report by the United Nations Conference on Trade and Development (UNCTAD) shows that, in 2011, Poland recorded one of the greatest increases in foreign direct investment worldwide. It attracted $15.1 billion in FDI, the third highest figure in the history of foreign investment in Poland (after 2007 and 2006). Compared with the previous year, FDI in Poland increased by 70 percent, from $8.9 million in 2010. This meant that Poland also pulled further ahead of its competitors in the region. The Czech Republic, the runner-up in Central and Eastern Europe, and Hungary, the number three investment destination in the region, each attracted roughly three times less FDI than Poland.
The 70-percent increase in foreign direct investment in Poland is exceptionally high compared with the global average of 16 percent, which is widely seen as an excellent result in its own right. The FDI inflow in Poland last year for the first time exceeded its pre-crisis average. According to UNCTAD forecasts, global FDI inflows will grow moderately in the near future.
Poland’s investment appeal makes it a top destination for modern business services in Europe. Poland is home to the main European centers of many international corporations, and it is here that these global market leaders most often make their strategic decisions.
“Poland has become the undisputed leader of modern business services in Europe,” says Jacek Levernes, board member at HP Europa and president of the Association of Business Service Leaders in Poland (ABSL). “In recent years many leading international companies have chosen Poland as the location for their key service centers. And this was no coincidence—Poland boasts a unique combination of assets such as access to educated staff fluent in foreign languages, openness on the part of the central and local authorities to work with businesses, and geographical and cultural proximity to countries where the main customers come from.”
Precisely thanks to these factors, Poland has become the top destination in Europe and one of the top five destinations in the world for modern business services, according to a study by the Everest agency.
In turn, The Hackett Group, in its report for 2011, says that Poland is the third most important offshoring destination in the world, after India and China.
Employment in the modern business services sector in Poland already exceeds 90,000 and is expected to overshoot 100,000 by the end of 2012. Such a fast rate of growth, especially at a time of economic downturn in Europe, means that Poland is a particularly strong player in Europe in terms of modern business services. Polish specialists handle increasingly advanced tasks that require specialist knowledge and experience. One in five jobs for which outsourcing centers recruit workers in Poland involves research and development.
Further proof of Poland’s growing position in the global economy is that foreign investors are increasingly eager to buy Polish Treasury securities. Between May and July alone, foreign involvement in Polish securities increased by zl.17 billion. At the end of July, the portfolio of foreign investors approached a record zl.180 billion. Polish bonds can be found in the portfolios of central banks in various countries. The same goes for the Polish currency, which is slowly becoming an attractive investment not only for speculators.
The Polish currency and Treasury bonds are part of the reserve assets of Asian central banks, including the People’s Bank of China, but investors in Europe are also increasingly interested in the Polish zloty. Central banks are diversifying their portfolios by investing on the Polish foreign exchange and debt markets.