Favourable Economic Prognosis for Krakow

Poland's economic results in 2006 were the best in the last 17 years. The inflation level was one of the lowest in Europe, foreign companies invested over USD 10 billion in Poland, and the competitiveness of Polish enterprises increased. The situation on the labour market improved, with unemployment falling by 2.5 percentage points. The Warsaw Stock Exchange also noted record investor activity in 2006.

In the face of such good results in 2006, the question arises how the economy is going to develop in 2007.

According to experts from the Polish Academy of Sciences, economic growth won't slow down at least through the first half of 2008.
According to Minister of Finance Zyta Gilowska, "The Polish economy accelerated in the third quarter of 2006 and it is now moving at a rapid tempo."

The economy and enterprises have seen economic growth mainly thanks to the privatization process and integration with the European Union. One consequence of integration is the economy's increasing independence from politics. That is why, according to the analysis of experts from the Polish Confederation of Private Employers (PKPP Lewiatan), the growth trend which started in 2006 should continue in 2007. GDP may grow this year by 4.8%. It is hard to predict tendencies for years further into the future.

According to Minister of Labour and Social Policy Anna Kalata, the unemployment level at the end of 2007 may fall to 13.6%.
The upcoming years should bring an improvement in the state of Polish roads and railways, as the government plans to spend increased EU funds on infrastructure development and motorway construction. According to economists, further reforms are the key issue for maintaining economic growth, along with reducing labour costs, making use of EU funds, and investing in new technologies.

This has very positive implications for property value growth into the future.

Source: Polish Information and Foreign Investment Agency. Jan 2007

Krakow Special Economic Zone

Tens of millions invested. About 20 new investment permits, capital expenditure worth tens of million PLN and 60 hectares of new terrain - these are the plans for the following year of the Krakow Special Economic Zone (KSEZ).

At the beginning of 2007, on the basis of a new act waiting for the signature of the Prime Minister, the regional aid in KSEZ will increase from 40 to 50 percent for large companies and even up to 70 percent in the case of medium and small enterprises - said Krzysztof Poradzisz, the President of Krakow Technology Park (KTP), the company managing the KSEZ.

The new, higher level of regional aid became a magnet attracting entrepreneurs. This year the KSEZ plans to issue over 20 new permits. For comparison - last year they have issued 13 new permits, and in 2005 only four.

The KTP looks especially for investors from the high-tech, IT and electronic fields. So far the KTP has issued 40 permits to such companies as - Motorola, ComArch, Shell, Ericpol, ACS i MAN, Car Technology Production and RR Donnelley. These investments have brought until now four thousand new jobs and in two years they will create another three thousand. To the end of 2009 the companies plan the expenditure worth 600 million PLN.

The Krakow Zone has been created in 1998, it used to have an area of 66 hectares. Nowadays it consists of 264 hectares in seven sub-zones (Czyżyny, Pychowice, Branice, Kraków Business Park in Zabierzów, Niepołomice and Tarnów Industry Claster) in regions of Malopolska and Podkarpacie. This year the KTP intends to enlarge the area by 60 hectares in Krakow, Niepołomice, Brzesk and Tarnów. The year 2007 should be profitable for all of the Special Economic Zones. The investments started in 2006 may reach nine billion PLN.

Poland - top investment location in Europe

According to FedEE Poland is the top investment location in Europe . More than 5 billion Euros invested in Poland.

At the end of July 2007 foreign firms had invested 5.609 billion Euros into Poland this year. In July alone the value of foreign direct investments (FDI), reached 1.116 billion Euros – the National Bank of Poland reported.

This year’s results are even higher than the flow of investments in the same period last year - and last year was a very successful year for Poland - when the value of new investments stood at 5.110 billion Euros.

The Polish Information and Foreign Investment Agency (PAIiIZ) ended the first half year having participated in a record 31 projects. The single most important effect of PAIiZ’s work has been assisting in the creation of 10,500 new work places, resulting from the implementation of these projects. The value of the projects realized was 746 million Euros, an increase of 320% on the previous year.

According to Ernst&Young’s report, Poland is in seventh place worldwide as a potential location for foreign investors. While Augusts’ ranking by the Federation of European Employers (FedEE) placed Poland as the top investment location among Europe’s 31 states.

This is all good news for the property market.