Polish entrepreneurs have been operating in an unfavorable market environment and under conditions of great uncertainty for months. This translates into negative moods and a lesser inclination for investment. Given the planned increases in the minimum wage in the coming months, Polish companies are expecting additional challenges associated with rising employee costs. “In addition, the lack of reliable forecasts, the lack of predictability and economic stability, hampers the planning of further activities, profitability and liquidity calculations, and making any business decisions based on this” Announces Jacek Goliszewski, President of the Business Centre Club.
“Polish entrepreneurs are unfortunately in a very difficult situation at the moment. We have high inflation, uncertain energy carrier prices, and high financing costs as a result of high-interest rates which, albeit recently lowered by the President of the National Bank of Poland, Adam Glapiński, is still not enough. We also have exchange rate fluctuations and a lack of funds from the Regional Operational Program which would act anti-inflationary and pro-investment. All this causes entrepreneurs to look for savings, as these simple reserves have already been exhausted. As a result, they withdraw or suspend investments, lower their margins, or possibly raise prices, but all these solutions are unfortunately very bad,” says Jacek Goliszewski.
According to the Monthly Economic Sentiment Index, published regularly by the Polish Economic Institute and BGK bank, there has been a prevailing negative sentiment among Polish entrepreneurs for some time. In September, this index reading was 0.3 points higher on a monthly basis and reached a level of 96.3 points. This is only 2.6 points higher than the lowest value recorded at the beginning of this year.
In September, the key factor negatively affecting the sentiment of entrepreneurs turned out to be weaker readings of current sales and demand for products and services. Up to a third of the companies surveyed reported a decrease in orders compared to the previous month, and 22% of enterprises felt a drop in foreign demand compared to last year.
The Monthly Economic Sentiment Index also shows that negative moods are particularly prevalent in the service, transport and logistics, and commercial sectors. Mid-sized, small, and micro firms are also pessimistically looking into the future.
“The investment levels among companies are currently the lowest since 2015 – about 16% of GDP. We must take into account that these are not only new investments, but also regenerative investments, which means that if a fixed asset or production line is worn out, entrepreneurs have to reproduce it. However, in practice there might be very few net investments,” says the President of the BCC.
The situation of Polish companies is expected to be further complicated in the near future due to the planned increases in the minimum wage. As Jacek Goliszewski stresses, entrepreneurs are in favor of raising the minimum wage. However, with rising costs, there is not much room to look for cost cuts.
In conclusion, the President of the BCC, Jacek Goliszewski claims that “Businesspeople are of course afraid for their future. These jumps in costs are causing the closing down and abandoning of operations, especially in the case of small and medium-sized enterprises. Only in the past year, about 110 thousand small and medium enterprises have closed. In addition, the lack of reliable forecasts, the lack of predictability and overall economic stability make it difficult to plan further activities, calculate profitability, liquidity and make business decisions based on this.”
