Temporary reduction

The ongoing economic crisis is likely to change the shape of foreign direct investment (FDI) to Poland, according to the Polish Information and Foreign Investment Agency (PAIiIZ).

FDI to Poland will fall to €10-12 (zł.37.5-45) billion in 2008, according to an official forecast released by the agency last week. PAIiIZ and the National Bank of Poland have estimated that FDI in 2007 came in at around €16.6 (zł.62.1) billion.

Unsurprisingly, the agency cited the recent global economic turmoil as the key factor behind this year's decrease. It also said that the crisis may change the structure of FDI to Poland, with the result being an increase of investments in service-based industries and a decrease of production-based investment.

Service-based investments make up 20 percent of FDI in Poland, compared with an EU average of 60 percent.

"The proportions will get closer to the European results in the upcoming years," the agency said in a statement.

PAIiIZ expects FDI from export-oriented sectors to decrease, especially in the motor, electronics, and white-goods industries. In turn, the BPO, shared-service centers and R&D investments will increase.

PAIiIZ's forecast of falling FDI is a realistic assessment, according to Tomasz Kalinowski from the Gdańsk Institute for Market Economics (IBnGR).

"The crisis and lower demand in the EU has had a detrimental impact on foreign investments in Poland in export-reliant industries," he said.