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- GDP (PPP):
- $1.0 trillion
- 3.6% growth
- 3.0% 5-year compound annual growth
- $26,455 per capita
- Inflation (CPI):
- FDI Inflow:
Poland’s economy has demonstrated a fairly high degree of macroeconomic resilience. Structural reforms that have included trade liberalization, implementation of a competitively low corporate tax rate, and modernization of the regulatory environment have facilitated the transition to a market-oriented economy.
Fiscal consolidation and prudent management of public finance are ongoing concerns. The government needs to further reduce the budget deficit and curb the growth of public debt. In 2016, an additional tax on financial-services companies was imposed to help finance increased social spending. Continued reform, particularly in strengthening the independence of the judiciary and eradicating corruption, is needed to ensure greater economic dynamism.
Poland joined NATO in 1999 and the European Union in 2004. The center-right Civic Platform Party was ousted following parliamentary elections in October 2015. The conservative, Eurosceptic Law and Justice Party headed by Prime Minister Beata Szydlo won a parliamentary majority. Buoyed by its strong institutions, Poland was the only European country to experience economic growth during the 2009 credit crisis. Poland hosted the 2016 NATO Summit in Warsaw, and a rotational battalion of U.S. troops is to be deployed to Poland beginning in 2017. The private sector now accounts for two-thirds of GDP. A geographic split exists between a poor rural eastern region and the industrialized, more prosperous western region.
The legal system protects rights to acquire and dispose of property. The judiciary is independent but also slow to operate and sometimes subject to political pressure. Allegations of corruption occur most frequently in government contracting and the issuance of a regulation or permit that benefits a particular company. Incidents of such behavior have been decreasing and, if proven, are usually punished.
The top income tax rate is 32 percent, and the corporate tax rate is a flat 19 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 31.9 percent of total domestic income. Government spending has amounted to 42.1 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.4 percent of GDP. Public debt is equivalent to 51.3 percent of GDP.
A new bankruptcy and insolvency code took effect in January 2016. The nonsalary cost of employing a worker is relatively high. Unions exercise considerable influence on contract termination and other labor issues. Poland, the largest recipient of EU subsidies, has few price controls but does administer prices on pharmaceuticals, taxi services, and goods and services in cases that are viewed as threatening the economy.
Trade is important to Poland’s economy; the value of exports and imports taken together equals 96 percent of GDP. The average applied tariff rate is 1.5 percent. Restrictions on ownership of agricultural land took effect in 2016, and state-owned enterprises distort the economy. The financial sector continues to expand. Credit is available on market terms, and foreign investors can access domestic financial markets.