2020 Index of Economic Freedom

Poland

OVERALL SCORE69.1
WORLD RANK46
Rule of Law

Property Rights63.1

Judicial Effectiveness42.8

Government Integrity64.6

Government Size

Tax Burden74.7

Government Spending48.8

Fiscal Health92.2

Regulatory Efficiency

Business Freedom62.6

Labor Freedom62.0

Monetary Freedom82.0

Open Markets

Trade Freedom86.4

Investment Freedom80.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 38.0 million
  • GDP (PPP):
    • $1.2 trillion
    • 5.1% growth
    • 4.0% 5-year compound annual growth
    • $31,939 per capita
  • Unemployment:
    • 3.7%
  • Inflation (CPI):
    • 1.6%
  • FDI Inflow:
    • $11.5 billion

Poland’s economic freedom score is 69.1, making its economy the 46th freest in the 2020 Index. Its overall score has increased by 1.3 points, primarily because of a higher government integrity score. Poland is ranked 25th among 45 countries in the Europe region, and its overall score is approximately equal to the regional average and well above the world average.

The Polish economy has been climbing the ranks of the moderately free for more than a decade. That progress has been matched by steady GDP growth over the past five years, driven by booming private consumption and investment.

To make it over the hurdle into the ranks of the mostly free economies, the government will have to confront its most problematic Index indicator: government overspending. Cognizant of that imperative, the newly reelected government has tabled a draft 2020 budget that targets a balanced central government budget and a general government shortfall of just 0.3 percent of GDP.

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Background

Poland helped to bring down the Soviet Union in 1990, joined NATO in 1999, and became a member of the European Union in 2004. The conservative and euroskeptic Law and Justice Party (PiS), first elected to power in 2015, won an even bigger parliamentary majority in October 2019 elections. The government continues to clash with the EU over mandatory migrant quotas. Encouraged by a strong manufacturing sector and infrastructure investment, Poland has become the EU’s eighth-largest economy, although it is somewhat constrained by labor shortages in such key sectors as construction and information technology. Tensions exist between the poorer and rural eastern region of the country and the more prosperous and industrialized western region.

Rule of LawView Methodology

Property Rights 63.1 Create a Graph using this measurement

Judicial Effectiveness 42.8 Create a Graph using this measurement

Government Integrity 64.6 Create a Graph using this measurement

Secured interests in property, both movable and real, are recognized and enforced through a reliable recording system. A key concern regarding the judiciary is the executive’s recently expanded power to remove up to 40 percent of the Supreme Court’s judges and the justice minister’s power to discipline judges. Allegations of corruption occur most frequently in connection with government contracts and the issuance of regulations or permits.

Government SizeView Methodology

The top individual income tax rate is 32 percent, and the corporate tax rate is a flat 19 percent. Other taxes include value-added and property taxes. The overall tax burden equals 33.9 percent of total domestic income. Government spending has amounted to 41.3 percent of the country’s output (GDP) over the past three years, and budget deficits have averaged 1.4 percent of GDP. Public debt is equivalent to 48.4 percent of GDP.

Regulatory EfficiencyView Methodology

The tax system for businesses has become somewhat more complicated. Policy changes are sometimes fast-tracked without input from businesses or labor unions. Rules supported by powerful labor unions cause employers to use more temporary and contract workers that they can fire more easily. In late 2018, the government received a waiver from new EU electricity market regulations to permit state subsidies to coal-fired power stations beyond 2025.

Open MarketsView Methodology

The total value of exports and imports of goods and services equals 107.2 percent of GDP. The average trade-weighted applied tariff rate (common among EU members) is 1.8 percent, with 637 EU-mandated nontariff measures reportedly in force. Poland has an additional 340 country-specific nontariff barriers. Foreign and domestic investors are generally treated equally. The financial sector consists mainly of private banks, and capital markets are expanding.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland820.1
2Ireland80.90.4
3United Kingdom79.30.4
4Denmark78.31.6
5Estonia77.71.1
6Georgia77.11.2
7Iceland77.10.0
8Netherlands770.2
9Lithuania76.72.5
10Luxembourg75.8-0.1
11Finland75.70.8
12Sweden74.9-0.3
13Czech Republic74.81.1
14Germany73.50.0
15Norway73.40.4
16Austria73.31.3
17Latvia71.91.5
18Armenia70.62.9
19Bulgaria70.21.2
20Cyprus70.12.0
21Romania69.71.1
22North Macedonia69.5-1.6
23Malta69.50.9
24Azerbaijan69.33.9
25Poland69.11.3
26Belgium68.91.6
27Slovenia67.82.3
28Kosovo67.40.4
29Portugal671.7
30Albania66.90.4
31Spain66.91.2
32Slovakia66.81.8
33Hungary 66.41.4
34France662.2
35Serbia 662.1
36Turkey64.4-0.2
37Italy63.81.6
38Bosnia and Herzegovina62.60.7
39Croatia62.20.8
40Moldova622.9
41Belarus61.73.8
42Montenegro61.51.0
43Russia612.1
44Greece59.92.2
45Ukraine54.92.6
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