The inflow of foreign direct investment into Poland amounted to 4.3% of GDP in 2021, according to the National Bank of Poland (NBP). Reinvestment of profits increased last year by about 60% y/y to PLN 75.5 billion. In contrast to the previous year, there was a strong capital inflow from debt instruments of PLN 19.1 billion.
“Capital inflows from foreign direct investment in 2021 amounted to PLN 114.2 billion. The dominant position in capital inflows was, as in previous years, reinvested earnings (PLN 75.5 billion). The balance of transactions also increased as a result of acquisitions of equity interests and capital injections (PLN 19.5 billion) and transactions related to debt instruments (PLN 19.1 billion). The inflow of foreign direct investment reached 4.3% of GDP in 2021, according to the NBP publication “Polish Direct Investment Abroad in 2021”.
The ratio of the value of foreign direct investment transactions in Poland to the volume of GDP indicates a significant increase in this indicator in 2021, to over 4%. This is a consequence of a significant increase in the balance of foreign investment transactions in Poland, with a high, although lower than the growth of transactions, GDP growth rate in 2021. In both cases, the high growth rates were due to the rebound observed domestically and globally after a pandemic year in 2020, according to the report.
Foreign-owned companies achieved very good financial results in 2021, so the importance of reinvested profits was greater than the transfer of new capital from abroad, it also stated.
“As a result, the flows came from countries with the highest capital exposure in Poland. These can include Spain (net transactions of PLN 14.1 billion), Germany (PLN 13.5 billion) and the Netherlands (PLN 12.7 billion),” – it further reads.
At the end of 2021, foreign direct investment liabilities in Poland amounted to PLN 1,099 billion, up by PLN 137 billion, or 14.2% y/y. As in previous years, the main factor in this increase was an increase in liabilities from shares and other forms of equity, the NBP reported.
“If we take into account the country of origin of the parent entity in the capital group, Germany remained the largest direct investor in Poland in 2021. The balance of their foreign investment receivables in Poland amounted to PLN 209.5 billion at the end of the analyzed year. France came next (PLN 107.1 billion), followed by the Netherlands (PLN 103.1 billion). In fourth place was the United States (PLN 96.1 billion), and the top five investors were closed, as in the previous year, by the United Kingdom (PLN 59.5 billion).” – The central bank also wrote.
The improving economy and the rebound of economies after a pandemic 2020 contributed to the increase in non-resident direct investment income in Poland last year, and was higher by about 40% y/y reaching PLN 122.7 billion, of which reinvested earnings amounted to PLN 75.6 billion (an increase of more than 60%), and dividends paid amounted to PLN 39 billion, it also stated.
As in previous years, the largest inflow of foreign direct investment to Poland was recorded by the services sector.
This inflow amounted to PLN 58.3 billion and was PLN 18.3 billion higher than in the previous year. In this sector, most funds went to the following sections: professional, scientific and technical activities (PLN 23.1 billion), wholesale and retail trade, repair of motor vehicles and motorcycles (PLN 18.5 billion) and real estate activities (PLN 11.4 billion), it also stated.
Source: NBP and ISBnews
