Economics Webinar: What do you think about the hot topics in CEE

Rafał Benecki: Investment as a percentage of GDP in Poland fell to 17.8% in 2023 from over 20% a decade ago. One of the reasons for this state of affairs is the reluctance of companies to invest. This is a significant weakness of the Polish corporate sector, as the remaining economies of Central Europe and the euro area managed to increase investments and reverse the negative trend that has prevailed since the global financial crisis.

The above study indicates that companies may refrain from investing due to the proximity of war. Other research we have done on this topic suggests that institutional deterioration ahead of the October 2023 elections is responsible for poor investment, such as unpredictable taxes and other regulations.

The previous government’s stop-and-go policy regarding EU funds also thwarted enterprises’ investment plans. With interest rates much higher than before the pandemic, the choice between EU funds and expensive loans is obvious. We believe that there is still a lot of catching up to do, as the corporate sector in Poland is the second highest in the EU in terms of deleveraging.