The impending recession brought on by the Covid-19 pandemic has cast a cloud over every country in the world. And while it may be too soon to understand what the global outlook will be with regards to foreign direct investment (FDI) in the coming years, a country showing how volatile any recovery can be is Poland.
fDi Markets initially reported Poland to be the most resilient global economy when it came to dealing with the challenges posed by Covid-19 with regards to FDI. Despite the impact of the pandemic, Poland had actually increased its number of FDI projects from 145 to 165 when comparing January–April in 2020 to the same period in 2019. Renewable energy investments helped drive this increase, while real estate investment continued to hold the lion’s share of projects.
However, figures from the National Bank of Poland show that the country’s FDI projects have significantly decreased in value. Between May and June 2020, Poland’s inbound FDI figures fell by $1bn. In this time its outbound FDI figures increased by $735m.
Poland’s favourable climate
Overall, the business climate in Poland has a reputation of being good to investors, with the country ranking 40th in the World Bank’s 2020 Doing Business report, although this is down by seven places on its 2019 position. A large population, strong transport links, EU membership, a relatively cheap and skilled workforce, and overall economic stability are considered to be Poland’s most attractive assets for investors.
According to the UN Conference on Trade and Development’s World Investment Report 2020, Poland’s largest source markets for FDI include China, South Korea and the US. However, Poland’s investment landscape has changed in 2020.
As a result of Covid-19, Poland has become more protective of its businesses and has implemented stricter FDI screening measures, with new regulations coming into practice. This includes a bill aimed at introducing a rigid temporal FDI screening regime that would apply to foreign acquisitions of 20% or more across a number of different areas, including public listed companies and companies controlling strategic infrastructure or developing critical IT software.
Technology and IT software has become a prominent sector for Poland. In particular, capital city Warsaw has seen its tech sector boom in recent years, becoming a start-up hub within Europe. The city has seen big investments from tech giants including Google, which announced plans in June to invest up to $2bn in Warsaw. This follows Microsoft‘s announcement in May of a $1bn investment.