Skip to Main Content
Kontaktieren Sie uns

Offering fresh insights and analysis, our emerging markets professionals explore top-of-mind questions about investing across the asset class in our monthly Emerging Markets Monitor. Read what they have been discussing.

Poland may represent a good option for companies seeking new geographies for supply chains. It is the European Union’s (EU) sixth-largest economy, and a major conduit between Eastern and Western Europe. We believe Poland also has an impressive growth trajectory, a diverse basket of exports, and is growing manufacturing in advanced industries like electric vehicles and batteries.

More specifically, high trade integration with Europe and its partners—like access to the single market and customs union, along with conformity on EU standards on trade, investment, and defense—situates Poland strongly vis-à-vis reshoring peers. Because of Poland’s strong ties with Europe and the United States, Poland also offers investors easy access via streamlined investment processes. The United States is Poland’s largest non-EU Foreign Direct Investment (FDI) partner, and we believe tax treaties make American investments in Poland smoother than other geographies.

Additionally, high-quality infrastructure already in place in Poland, like rail and roads, has enabled deep logistics networks and a robust local supply chain ecosystem within the country that provides trade linkages across the EU. Initiatives such as the National Road Construction Program 2014–2023 and the Railway Program 2015–2023 have further improved its quality. With the return to power of Prime Minister Donald Tusk, unlocking EU funding through more amenable leadership may channel further investments into the country and is encouraging. Furthermore, energy independence overall has insulated production from disruptions and price spikes, despite some dependence on domestic coal.

Unlocking EU funding is an important step toward Poland’s economic agenda, “Industry 4.0.” This aims to leverage Poland’s diverse economy, with a renewed focus on manufacturing and technologies. Introduced in 2019, these manufacturing-centric policies target eight industries for greater investment and expansion, alongside the pursuit of energy independence and net-zero emissions by 2050.1

Poland has fourteen Special Economic Zones (SEZs) for these industries, and foreign investors are offered tax incentives via the Polish Investment and Trade Agency. Exemptions include a corporate income tax break of up to 50% of investments, and SEZs come equipped with infrastructure for manufacturing and trade.

Focus on Manufacturing Is Concerted and Growing

Manufacturing, Value Added % Share of GDP

As of 31 December 2023

Source: OECD, World Bank

Poland has a sophisticated local supply chain ecosystem, particularly within the automotive, construction materials, furniture, agrifood, and information technology sectors. A major benefit of this diversified approach is that Poland is not reliant on one industry, and its diversified economy would benefit from multiple streams of EU funding for climate change, and advanced innovation like robotics and automation.

The COVID-19 pandemic accelerated Poland’s digital transformation and has hastened the development of a modernized supply chain ecosystem with technology at its core. According to the European Investment Bank Investment Survey 2022, 66% of Polish companies have implemented at least one advanced digital technology in their supply chain operations.

The government also encourages collaboration between research institutions and industry through programs like the Polish National Smart Specialization Strategy, which promotes R&D and innovation. Consequently, global corporations seeking to operate in Poland will likely benefit from a digitally savvy workforce that is productive across multiple sectors.

Poland’s outlook is complicated. Prime Minister Donald Tusk, an EU insider, may struggle to transform Poland quickly because of the country’s long-standing institutional problems, his Civic Platform party’s slim majority in parliament, and the need to make major defense investments in the face of Russia’s invasion of Ukraine and ongoing territorial and border concerns. The far-right Law and Justice Party (PiS) that governed from 2015–2023 before Tusk still wields considerable influence in domestic politics and has a more abrasive style that knocks against Brussels’ priorities; this could threaten long-term stability without further investments in institutional capacity and independence.

Labor shortages significantly handicap Poland’s growth prospect, which is a challenge compounded by prevalent domestic anti-immigration sentiments. Poland has a highly educated work force; at the same time, 72% of Polish employers reported labor shortages as a key problem, and a tight labor market with historically low unemployment and high labor force participation means that the solution to Poland’s worker shortages cannot, in the short term, be solved internally. Accepting over one million Ukrainian refugees in the aftermath of the invasion helped, but this one-time shock is insufficient over the long term. Meanwhile, Tusk has adopted much of the anti-immigration rhetoric of the PiS.2 As a result, we believe labor shortages are likely to impact companies operating in Poland, making expansion potentially more challenging and expensive, given the limited pool of labor.

Chronic water shortages are also problematic for the country and the implementation of water restrictions during summer months pose critical challenges to industrial plans, particularly for water-intensive businesses. The country struggles with droughts and has one of the worst water scarcity rates in Europe with a water use intensity roughly double the OECD average. Industry in Poland consumes 70% of water resources, two to three times higher than other EU nations, so water scarcity would impact industrial production and potentially lead to cost increases for industry.3

Related Insights

India: No Small Part of Big Election Year Investment Insights
Investment Insights

India: No Small Part of Big Election Year

In this month’s Emerging Markets Monitor, we delve into the 2024 global electoral environment, casting a spotlight on India’s pivotal role. Swipe through our Q&A for insights.

22. Jan 2024 6 min read
EM Local Currency Bonds: Why Non-Dollar Assets Now? Investment Insights
Investment Insights

EM Local Currency Bonds: Why Non-Dollar Assets Now?

Learn why investors may want to diversify into non-dollar assets now in this edition of Emerging Markets Monitor.

23. Feb 2024 5 min read
Next Indonesian Leader Leans into Continuity Investment Insights
Investment Insights

Next Indonesian Leader Leans into Continuity

Learn what Indonesia's recent presidential election could mean for investors in this edition of Emerging Markets Monitor.

18. März 2024 5 min read

Notes


1 Aviation, automotive parts manufacturing, ship building, defense, food processing, chemicals, information technology, and furniture manufacturing
2 https://unherd.com/newsroom/tusk-donald-polish-pm-immigration-borders/
3 https://www.trade.gov/country-commercial-guides/poland-environmental-technologies

The performance quoted represents past performance.

Past performance does not guarantee future results.

This material is for informational purposes only. It is not intended to, and does not constitute financial advice, fund management services, an offer of financial products or to enter into any contract or investment agreement in respect of any product offered by Lazard Asset Management and shall not be considered as an offer or solicitation with respect to any product, security, or service in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or unauthorized or otherwise restricted or prohibited.

Information and opinions presented have been obtained or derived from sources believed by Lazard Asset Management LLC or its affiliates (“Lazard”) to be reliable. Lazard makes no representation as to their accuracy or completeness. All opinions expressed herein are as of the published date and are subject to change.

Allocations and security selection are subject to change.

No risk management technique or process can guarantee return or eliminate risk in any market environment.

Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss.

Securities in certain non-domestic countries may be less liquid, more volatile, and less subject to governmental supervision than in one’s home market. The values of these securities may be affected by changes in currency rates, application of a country’s specific tax laws, changes in government administration, and economic and monetary policy.

Emerging markets securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities markets of emerging markets countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in these countries.

An investment in bonds carries risk. If interest rates rise, bond prices usually decline. The longer a bond’s maturity, the greater the impact a change in interest rates can have on its price. If you do not hold a bond until maturity, you may experience a gain or loss when you sell. Bonds also carry the risk of default, which is the risk that the issuer is unable to make further income and principal payments. Other risks, including inflation risk, call risk, and pre-payment risk, also apply.

High yield securities (also referred to as “junk bonds”) inherently have a higher degree of market risk, default risk, and credit risk.

Derivatives transactions, including those entered into for hedging purposes, may reduce returns or increase volatility, perhaps substantially. Forward currency contracts, and other derivatives investments are subject to the risk of default by the counterparty, can be illiquid and are subject to many of the risks of, and can be highly sensitive to changes in the value of, the related currency or other reference asset. As such, a small investment could have a potentially large impact on performance. Use of derivatives transactions, even if entered into for hedging purposes, may cause losses greater than if an account had not engaged in such transactions.

Small- and mid-capitalization stocks may be subject to higher degrees of risk, their earnings may be less predictable, their prices more volatile, and their liquidity less than that of large-capitalization or more established companies’ securities.

Mention of these securities should not be considered a recommendation or solicitation to purchase or sell the securities. It should not be assumed that any investment in these securities was, or will prove to be, profitable, or that the investment decisions we make in the future will be profitable or equal to the investment performance of securities referenced herein. There is no assurance that any securities referenced herein are currently held in the portfolio or that securities sold have not been repurchased. The securities mentioned may not represent the entire portfolio.

Investments in global currencies are subject to the general risks associated with fixed income investing, such as interest rate risk, as well as the risks associated with non-domestic investments, which include, but are not limited to, currency fluctuation, devaluation, and confiscatory taxation. Furthermore, certain investment techniques required to access certain emerging markets currencies, such as swaps, forwards, structured notes, and loans of portfolio securities, involve risk that the counterparty to such instruments or transactions will become insolvent or otherwise default on its obligation to perform as agreed. In the event of such default, an investor may have limited recourse against the counterparty and may experience delays in recovery or loss.

Certain information included herein is derived by Lazard in part from an MSCI index or indices (the “Index Data”). However, MSCI has not reviewed this product or report, and does not endorse or express any opinion regarding this product or report or any analysis or other information contained herein or the author or source of any such information or analysis.

The MSCI Emerging Markets Index is a free-float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The MSCI Emerging Markets Index consists of emerging markets country indices including: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any Index Data or data derived therefrom. The MSCI Index Data may not be further redistributed or used as a basis for other indices or any securities or financial products.

Certain information contained herein constitutes “forward-looking statements” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “intent,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events may differ materially from those reflected or contemplated in such forward-looking statements.

The MSCI Emerging Markets (EM) Asia Index captures large and mid cap representation across 9 Emerging Markets countries. With 1,117 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

The MSCI Emerging Markets EMEA Index is a free-float-adjusted market capitalization index that is designed to measure equity market performance in the emerging markets countries of Europe, the Middle East, and Africa.

The MSCI Emerging Markets Latin America Index is a free-float-adjusted market capitalization index that is designed to measure equity market performance in the emerging markets countries of Latin America.

The MSCI Emerging Markets Growth Index measures the performance of companies in the broader MSCI Emerging Markets Index with higher EPS growth estimates over the short term and long term, internal growth rates, long-term historical EPS, and long-term sales growth rates.

The MSCI Emerging Markets Value Index measures the performance of companies in the broader MSCI Emerging Markets Index with lower price-to-book, lower price-to-forward-EPS ratios, and higher dividend yields.

The MSCI Emerging Markets Small Cap Index includes small cap representation across Emerging Markets countries.

The JP Morgan Emerging Markets Bond Index (EMBI Global Diversified) is a uniquely weighted version of the EMBI Global. It limits the weights of those index countries with larger debt stocks by only including specified portions of these countries eligible current face amounts of debt outstanding. The countries covered in the EMBI Global Diversified are identical to those covered by the EMBI Global.

The JP Morgan Government Bond Index-Emerging Markets Global Diversified Index is a uniquely weighted version of the GBI-EM Global. It limits the weights of those index countries with larger debt stocks by only including specified portions of these countries’ eligible current face amounts of debt outstanding. The countries covered in the GBI-EM Global Diversified are identical to those covered by the GBI-EM Global Index.

The JP Morgan Corporate Emerging Markets Bond Broad Diversified Index (CEMBI Broad Diversified) is a uniquely weighted version of the CEMBI. It comprises only US dollar–dominated emerging markets bonds. The countries represented in the CEMBI Broad Diversified are the same as those in the CEMBI.

The indices are unmanaged and have no fees. One cannot invest directly in an index.

This document reflects the views of Lazard Asset Management LLC or its affiliates (“Lazard”) based upon information believed to be reliable as of the publication date. There is no guarantee that any forecast or opinion will be realized. This document is provided by Lazard Asset Management LLC or its affiliates (“Lazard”) for informational purposes only. Nothing herein constitutes investment advice or a recommendation relating to any security, commodity, derivative, investment management service, or investment product. Investments in securities, derivatives, and commodities involve risk, will fluctuate in price, and may result in losses. Certain assets held in Lazard’s investment portfolios, in particular alternative investment portfolios, can involve high degrees of risk and volatility when compared to other assets. Similarly, certain assets held in Lazard’s investment portfolios may trade in less liquid or efficient markets, which can affect investment performance. Past performance does not guarantee future results. The views expressed herein are subject to change, and may differ from the views of other Lazard investment professionals. 

This document is intended only for persons residing in jurisdictions where its distribution or availability is consistent with local laws and Lazard’s local regulatory authorizations. Please visit www.lazardassetmanagement.com/global-disclosure for the specific Lazard entities that have issued this document and the scope of their authorized activities.