Economic Survey 2018 Poland in the eyes of foreign investors

International Group of Chambers of Commerce in Poland

Characteristics of the surveyed companies Part I

42,1% Structure of respondents - branches. Branches 11,2% 2,0% 19,1% Construction Supply 42,1% 19,1% Services 25,7% Economic Survey 2018 Trade One fourth of businessmen taking part in the economic survey in 2018 represent the service industry (42.1%). Over 1/4 operate in manufacturing (25.7%), and almost one in five - in trade (19.1%). More than one in ten respondents engage in construction (11.2%). The lowest percentage of entrepreneurs represent electricity and water supply, or waste disposal sectors. Manufacturing

31,0% Structure of respondents – number of employees. 21,9% 29,7% 17,3% Over 250 employees Economic Survey 2018 No more than 9 employees The majority of entrepreneurs hire over 250 employees in 2018 (31.0%). Over a half of respondents are medium (29.7%) and small companies (21.9%). Only 17.3% of respondents represent micro companies.

51,8% Structure of respondents – share of exports in total turnover. 81-100% 14,9% 12,2% 51,8% Share of exports 41-60% 0-20% 11,2% 21-40% Economic Survey 2018 For 51.8% (over a half) of companies surveyed in 2018, the share of exports in total turnover was no more than 20%. On the other hand, for 14.9% of respondents it was between 80 and 100%. Other possible answers (20-40%, 40-60% and 60-80%) were chosen by 11.2, 12.2, and 9.9% of respondents, respectively. 9,9% 61-80%

Economic situation in Poland Part II

How do you evaluate the current state of the Polish economy How do you evaluate the current state of the Polish economy? Comparison to the previous editions of the survey 9,0% 9,0% 6,0% 12,1% Economic Survey 2018 The vast majority of entrepreneurs taking part in the 2018 economic survey positively assessed the current state of the Polish economy. Exactly a half (50.0%) graded economic situation as satisfactory, and another 46.4% - as good. A negative opinion was expressed by 3.6% of respondents. Good

Prospects for the economy What are the prospects for the Polish economy in 2018 compared to 2017? No change 33,8% 54,4% Better Prospects for the economy Economic Survey 2018 According to more than a half of respondents (54.4%), the outlook for the Polish economy in 2018 will remain unchanged compared to 2017. One in three respondents (33.8%), rated the prospects as better. 11.8% of respondents rated them negatively. 11,8% Worse

How do you evaluate the current economic situation of your company? Comparison to the previous editions of the survey 34,7% 35,0% 38,5% 38,0% Economic Survey 2018 Only 3.3% of respondents rated the current economic situation of their business badly. According to 32.5%, the situation is satisfactory. The most, more than 6 out of 10 respondents, considered the economic situation of their business as good (64.3%).

Prospects for the company What are the prospects for your company in 2018 compared to 2017? 56,6% 38,8% No change Better Prospects for the company Economic Survey 2018 Entrepreneurs' expectations about the company's situation in the current year, compared with the previous year, are very optimistic. According to over a half of the respondents (56.6%), the situation will improve, and almost 4 in 10 (38.8%) believe that it will remain unchanged. 4.6% of respondents expect that the situation will become worse. 4,6% Worse

What are the prospects for your company’s turnover in 2018 compared to 2017? 46,7% Increase No change Company’s turnover 47,4% Economic Survey 2018 As regards the company’s turnover in 2018, in comparison to last year, the proportion between investors that foresee no changes (47.4%) and those expecting an increase (46.7%) is almost one to one. 5.9% of respondents expect a decrease in turnover. 5,9% Decrease

What are the prospects for your company’s exports in 2018 compared to 2017? 28,2% 68,1% Increase Exports No change Economic Survey 2018 When it comes to the company’s exports in 2018 in comparison to 2017, a vast majority of respondents (68.1%) foresee no changes. Over 1/4 of entrepreneurs (28.2%) has a positive attitude in that regard, foreseeing an increase. Only 3.7% of respondents expect a decrease. 3,7% Decrease

What are the prospects for your company’s number of employees in 2018 compared to 2017? Comparison to the previous edition of the survey No change 45,4% 48,8% 45,3% Increase 49,1% Number of employees Economic Survey 2018 The structure of answers regarding the number of employees in 2018 is almost identical as in 2017. The differences between the results vary from 0.1 percentage points (increase and decrease of employment) to 0.3 percentage points (”no change” category). It is worth mentioning here, that the respondents, on average, predict a 6.2% growth of salaries in 2018., which is 1.2 percentage points more than in 2017. 5,7% 5,8% Decrease 2017 r. 2018 r.

What are the prospects for your company’s expenditure on investment in 2018 compared to 2017? Comparison to the previous edition of the survey No change 52,5% 36,7% Increase 53,1% 32,5% Economic Survey 2018 Investment Decrease In comparison to the 2017 economic survey, in 2018 the percentage of entrepreneurs that declare an increase of expenditure on investment has grown from 32.5 to 36.7%. There has been a slight decrease in the percentage of those declaring that their of expenditure on investment would remain unchanged. The percentage of respondents foreseeing a decrease in of expenditure on investment dropped from 14.4 to 10.8%. 14,4% 10,8% 2017 r. 2018 r.

Prospects for the companies in 2018 and 2017 Economic Survey 2018 In comparison to the 2017 economic survey, in the 2018 edition we observe a 1.9 point decrease in percentage of respondents declaring an improvement of branch prospects, and a 7.5 pp. increase in the percentage of companies expecting no changes. However, we can see more optimism among respondents when it comes to foreseeing an improvement in the company’s situation (up by 12.3 pp.). Also in investment expenditure more respondents have chosen the ”increase” option (up by 4.2 pp.), while at the same time fewer of them are pessimistic (down by 3.6 pp.) and neutral (down by 0.6 pp.). As regards employment and exports, no major changes were noted when it comes to the percentage of respondents declaring an increase. increase no change decrease

Investment factors Part III

Evaluation of investment factors (points and change of rank 2017/2018 1 – min; 5 – max) 1. EU membership 2. Employees’ qualifications 3. Higher education 4. Employees’ motivation and productivity 5. Quality and availability of local suppliers Economic Survey 2018 + 1 Similarly to the previous year, the leading position in the survey holds Poland’s EU membership with an average increase of 0.1 (up to 4.5). Staff qualifications were ranked second in the order of the average, while the average has grown by 0.2 (to 3.8). Third place was taken by higher education (an average of 3.7), while fourth by the employees’ motivation and productivity (an average of 3.6) – both went one position up in comparison to the 2017 edition of the economic survey. The productivity and motivation of employees holds the fifth position, two positions down in comparison to last year. - 2

Evaluation of investment factors (points and change of rank 2017/2018 1 – min; 5 – max) 6. Infrastructure (transport, communication, IT, energy) 7. Payment morale 8. R&D environment 9. Labour costs 10. Access to state or EU funding + 1 Economic Survey 2018 - 1 In 2018, the infrastructure was rated similarly to last year, 3.4 points. Seventh position was taken by the payment morale (average 3.2, decrease by 0.1). The average rating of the next investment factor – R&D conditions - has dropped slightly (3.1), but its ranking has risen one position up thanks to a decrease in the score of the following factor. As regards labour costs, the average dropped by 0.1 and the rank went one position down. The access to state or EU funding remains unchanged.

Evaluation of investment factors (points and change of rank 2017/2018 1 – min; 5 – max) 11. Fight against corruption and crime 12. Adequacy of vocational training 13. Legal flexibility of employment 14. Public administration 15. Transparency of open invitations to tender 16. Legal safety + 6 + 4 Economic Survey 2018 - 2 The average rating of the fight against corruption and crime increased by 0.1 and remains at the same position in the ranking). The adequacy of vocational training went 6 positions up, which is the best result in this year’s edition of the survey (average up by 0.2%). The legal flexibility of employment moved 4 positions up. The public administration remains in the same position. Position number 15 goes to the transparency of open invitations to tender, which got the same number of points as last year, but dropped by two positions anyway. The legal safety, despite a slight increase in the average score (by 0.04), moved one position down in the ranking. - 1

Evaluation of investment factors (points and change of rank 2017/2018 1 – min; 5 – max) 17. Availability of specialised staff 18. Tax burden 19. Tax system and tax administration 20. Predictability of economic policies 21. Political and social stability - 5 - 2 + 1 Economic Survey 2018 Among the factors ranked at the end of the list, the availability of specialised staff dropped by 5 positions (while at the same time losing 0.1 points), and tax burden moved two positions down. The predictability of economic policies and the political and social stability swapped positions. - 1

Evaluation of investment factors (points and change of rank 2017/2018 1 – min; 5 – max) Adequacy of vocational training 18. position 2017 + 6 12. position 2018 17. position 2017 + 4 13. position 2018 Legal flexibility of employment Availability of specialised staff 12. position 2017 - 5 17. position 2018 3. position 2017 - 2 5. position 2018 Quality and availability of local suppliers Transparency of open invitations to tender 13. position 2017 - 2 15. position 2018 Economic Survey 2018 On the other hand, the availability of specialised staff, the quality and availability of local suppliers, the transparency of open invitations to tender and the tax burden are the factors that dropped the most. 16. position 2017 - 2 18. position 2018 Tax burden

Investment attractiveness Part IV

YES Would you invest in Poland again? 90,1% NO 9,9% Economic Survey 2018 9 out of 10 entrepreneurs declare that they would invest in Poland again.

Would you invest in Poland again? Economic Survey 2018 The percentage of entrepreneurs that declare they would invest in Poland again dropped by 5.5 pp., which is the biggest decrease since 2009.

Investment attractiveness of CEE countries in 2018 according to 300 investors from Poland 6 – very attractive 1 – not attractive at all Economic Survey 2018 Poland got the best evaluation among the CEE countries when it comes to investment attractiveness. PL CZ SK EE SI LV LT RO HR HU BG

Investment attractiveness of CEE countries in 2018 according to 1700 investors from the region 6 – very attractive 1 – not attractive at all Economic Survey 2018 Poland got the second best evaluation among the CEE countries when it comes to investment attractiveness. CZ PL EE SK SI LV LT HR RO HU RS

Investment attractiveness of CEE countries according to investors from the whole region Country 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Czechia 1 2 Poland 4 Estonia 3 5 8 6 Slovakia Slovenia Latvia 7 9 13 11 Lithuania 10 Croatia Romania Hungary Serbia 12 Economic Survey 2018 Poland got the second best evaluation among the CEE countries when it comes to investment attractiveness.

Are you in favour of introducing the Euro in Poland? Economic Survey 2018 In comparison to 2017, more entrepreneurs are in favour of introducing the Euro in Poland (from 49.3% up to 53.8%). From 2009 to 2014 we were noticing lesser support for introducing the Euro among survey’s participants, however in 2015 and 2017 more and more businessmen declared their support for that solution. No No opinion

Thank you for your attention! Economic Survey 2018