Institute experts noted that after three decades of accelerated development, Poland finds itself in a place that until recently seemed like a distant dream. However, there is also worse news.
In their latest report – “Opening Balance”, they assessed that “the current growth model is running out and the pace of catching up with the richest economies in Europe is clearly weakening.”
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In their opinion, collapse of private investments – from 23-24 percent up to 17 percent GDP – has become the main constraint on growth.
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“Enterprise investment looks even worse: the corporate investment rate dropped from 12% of GDP (2000–2004) to only 9.3% of GDP in 2020–2024. Meanwhile, in the Czech Republic it remains at 15–18% of GDP, in Slovakia above 12% of GDP, and in Germany it is stable at around 11–12% of GDP,” they noted.
Analysts added that innovations and intangible capital remain “the weakest link in the Polish development model.”
They pointed out that although expenditure on research and development (R&D) increased from approx. 0.6 percent. GDP at the beginning of the century to 1.4-1.5 percent. GDP in the latest period is still approximately twice lower than in Germany.
In turn, enterprise expenses for this purpose increased from 0.18%. GDP (2005–2009) to 0.93 percent GDP in 2020–2023, while in Germany it has remained above 2 percent for years. GDP, and in the Czech Republic above 1%. GDP.
“The shallow domestic capital base does not keep up with the state's development ambitions. The savings rate is only 7.4 percent. disposable income – less than in the Czech Republic and Hungary” – indicated the authors of the report.
They reported that the household savings rate dropped from 12 percent. disposable income in the years 2000–2004 to 7.4 percent in the period 2020-2024 – despite the temporary pandemic “jump” upwards.
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Problem in public finances
They also warn that public finances are “approaching the limits of safe flexibility.” The ratio of general government debt to GDP increased from approx. 36%. GDP in 2000 to approximately 55 percent. GDP in 2024, and the debt servicing costs in 2024 were twice as high as the state budget expenditure on higher education and science, it was reported.
The Institute recommends that raising the investment rate of enterprises should become a priority shifting the structure of expenditures from short-term investments to projects increasing productivity (automation, energy transformation, digitalization). “This requires a stable, predictable regulatory environment and limiting the overproduction of law,” they stressed.
They also call for strengthening long-term savings through “a system of tax incentives (including a review of the capital gains tax for long-term investments) and the development of capital pillars of the pension system.” The aim is to increase the savings rate and the share of domestic capital in financing investments.
WEI would like to, too “restoring the balance of public finances and improving the quality of spending”. As he argues, reducing the structural deficit, organizing out-of-budget spending and shifting part of the funds from consumption transfers to development investments – especially in human capital, digital and energy infrastructure and R&D – is necessary.
“The report recommends shifting the emphasis from financing research for its own sake to supporting implementation, scaling innovation and creating test environments (regulatory sandboxes, high-quality legal zones), especially in the areas of digitalization, AI, knowledge-intensive services and modern industry,” the authors added.
