Poland: the economic powerhouse of Eastern Europe
Foreward by Andrew Chilvers
During the past two decades the key nations of Central and Eastern European (CEE) have grown significantly following moves to liberalise their economies. On average Poland, the Czech Republic, Hungary, Bulgaria and Romania, to name a few, increased their per capita GDP by 115% between 2004-2020. Employment was at its lowest ever at a mere 4.6% and productivity levels were catching up with the developed states of the EU.
In CEE countries growth has been the result of several factors such as the prosperity of the traditional industries, competitive exports and foreign investment, as well as the significant inflow of various funds from the EU and others.
However, this growth ground to an abrupt halt last year with the onset of the Covid-19 pandemic. As elsewhere, the pandemic hit the CEE region on several fronts, with disruptions to the regional services sector and global supply chains – this was particularly damaging to those countries with large vehicle manufacturing sectors. Nevertheless, the CEE economies are known for their economic resilience and many believe they are better positioned to cope with the aftermath of the Covid-19 crisis than their West European counterparts.
Indeed, many analysts predict that the next year or so will be only a temporary setback as CEE economies quickly find their feet again. With this gradual re-opening, the economies in the region are forecast to grow by a healthy 4.1% in 2021 from what was a severe 5.1% contraction last year, according to Moody’s Investors Services.
Overall, economic growth is expected to be more robust in the region compared with countries to the West due to the regional economies’ reliance on traditional manufacturing and heavy industry, with less exposure to hospitality and tourism. The collapse of the latter sectors has had devastating effects on countries such as Croatia and Greece but has spared the majority of CEE countries.
Poland: the economic powerhouse of Eastern Europe
Emerging markets and the digital revolution – a prime location for any foreign investment
There are many definitions for the term “emerging market” and in recent years this has been associated with rapidly developing economies, particularly in China, India, Brazil and the United Arab Emirates.
Poland has always been an important emerging market in Eastern Europe having a steadily rising economy with a large population and a solid financial sector. Since becoming an EU member in 2004, Poland has attracted a large amount of foreign investment. The reason for this is the country’s 40 million population (by far the largest in Eastern Europe), its central location between Western Europe and Russia, low transport costs, skillful yet affordable workers, high consumption and spending, and its stable economy and legal system.
This can be seen in the strong growth of incoming investment from abroad. Foreign investors outsource their businesses to Poland to set up here, especially R&D centres, and the success of this is ongoing. In a recent ranking by the United Nations Conference on Trade and Development, Krakow in southern Poland was ranked the top emerging city for global outsourcing, which suggests a further inflow of this kind of investment.
Furthermore, Poland’s economic development has been a huge success in recent years. According to the World Bank, Poland has achieved the status of a high-income country in record time. The increase in the share of exports of goods and services in global exports recorded in 2004-18 was the highest in the EU (motor vehicles, food, rubber and plastic goods – increased by 15 points). In addition, Poland is also a country which has made significant progress in the use of the internet and connectivity. Poland has improved in fast internet take-up and adopted digital technologies by business and by developments in digital public services.
The rise of the digital economy
The buying and selling of digital products online, transcending national boundaries, make for interesting jobs for lawyers who work on cross-border transactions. This emergence of new challenges involves international business transactions that include a variety of contracts and parties originating from different jurisdictions or international litigation.
In our daily legal practice, we handle these new challenges to ensure we meet the expectations of our clients who are dealing with different legal systems, customs, languages and demanding fast and effective solutions to legal problems.
Without question, the electronic age has brought increased efficiency and accessibility to the practice of law. Negotiating terms of contracts is now common via the internet, using tools such as Zoom, Teams and Skype. When concluding contracts by parties we usually advise them to sign the contract via the internet within a circulation procedure if permissible by law, when a scanned copy of a co-signed contract is offered to our parties for counter-signing.
An exemption to this rule occurs when it comes to the transfer of ownership of land in the form of a notary deed, which is required under Polish law. In these cases, we represent clients (the grantor and grantee) via a notarised power of attorney. Setting up entities through electronic media, without the necessity for shareholders/partners to appear in person before a notary, is a common practice today.
Banks in Poland are also willing to open accounts for international business entities without physical contact, and the necessity of providing original signatures in front of a bank officer by directors – and the accessing of online banking – is provided online as well. Also, holding shareholders’ meetings may be carried out via electronic means. But in such cases it is important to fix the procedure of calling the meeting, vote casting and final resolution passing in the Articles of Association beforehand.
In court action suits, we also increasingly apply on behalf of clients for the examination of witnesses and parties by the courts via video transmission, when the judge presiding over the court case asks the questions and the lawyers may cross-examine them via the internet.
If the witness is, for instance, overseas it is important to make sure that a sworn translator will be present in the court room to translate the communication between the witness and the judge and the attorneys of the plaintiff and the defendant.
Last but not least, the process of enforcement of foreign judgments and decrees is also digitally refined. These measures all help clients in a digital legal practice to conduct international business and to use them to facilitate the movement of information, goods, services, capital or people across national boundaries in Poland.