How do I invest money in Poland

Poland is pissing off investors - but it offers great potential

According to the figures, beyond the Oder and Neisse rivers, there is a picture that suggests investing in Poland. At least since joining the EU, the country has undergone impressive development, including the liberalization and deregulation of the once state economic structure.

63% of gross value added now comes from the service sector, 34.2% from industry plus construction and 2.8% from agriculture.

Investing in Poland - the numbers are not bad

The past few years have been characterized by consistently positive economic growth. In 2015, gross domestic product (GDP) increased somewhat more strongly than in the previous year by 3.6%. The forecast for 2016 had to be revised downwards, but growth of 3.2% is still looking good. For this year, 3.8% is assumed.

Another reason to invest in Poland: It is one of the fastest growing economies in Europe and the 34th largest market in the world. In addition, with an unemployment rate of 10%, things are better off than Spain or Italy, for example. Wages are rising faster than low inflation, which means higher purchasing power.

The advantage from a German point of view: The wage difference is 1: 5, which attracts a number of companies. Miele is investing 45 million in a plant in Poland, Daimler is building production facilities for car engines, and Lufthansa and GE Aviation, the aircraft offshoot of General Electric, want to build a maintenance center for engines.

Germany is by far Poland's largest trading partner with 27% of Polish exports and 23% of imports from the neighboring country. But despite the proximity of the EU partner, the hurdles have recently been unexpectedly raised.

Nationalist “repolonization” discourages investors

Poland is open to foreign investors and last year worked out an ambitious plan that should bring the country to the top in Europe. The focus is on structural strengthening, innovation, capitalization and reindustrialization. But under the right-wing Pis party, this primarily means repolonization.

Economics Minister Morawieckie believes that he has to establish a “dominance of foreign capital” and complains about the alleged “horrendous sums” that foreign companies brought out of the country, claiming that it was a “neo-colonial pension”.

Above all, banks and media should be controlled by Poland again. The government is not bothered by the fact that this contradicts the principle of free markets and violates EU law. It has already overturned the Constitutional Court and shown what it thinks of the rule of law.

And now there are special taxes on banking or commercial transactions for non-Poles. This affects retail chains from Germany or France, for example. A destructive double game with investors from whom one expects new jobs at the same time. Poland will hardly be able to go much further. There is simply not enough money to buy foreign investors out of the banks, for example.

Authorities distrust entrepreneurs

In addition, the Polish zloty has lost a good 10% of its value since the end of 2016, which has made foreign loans more expensive and widened the budget gap. Poland's creditworthiness has now been downgraded, Standard & Poor's to BBB + - outlook negative. Foreign banks are correspondingly cautious with financial commitments.

Even before the new penalty taxes, it was not easy to just invest in Poland. The authorities often appear arbitrary, the structure rigid and encrusted. The tax system is hardly transparent and is characterized by a fundamental distrust of entrepreneurs.

Those who manage to do it are faced with the fact that young qualified workers in particular have migrated abroad in droves, where they earn more. This leads to fluctuation in the workplace, although the willingness to be mobile is comparatively low.

All of this has a positive downside: if the political climate normalizes, there is plenty of room for reforms and potential. Investors who want to benefit early on can invest in an ETF on the MSSCI Poland from iShares. It has been going up again for a year - at 23%.

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