Economic slowdown in Europe weakens the inflow of investments to Poland

The Polish Economic Institute has published a report entitled “The investment attractiveness of Poland against the background of Central and Eastern Europe”, in which it analyses the inflow of foreign direct investment (FDI) to Poland in the years 1990-2024. It shows that our country remains the leader in the region in terms of attracting capital, but it is recording a clear slowdown in the field of new projects.

The report also points to the challenges posed by rising labour and energy costs and highlights the importance of innovation and infrastructure to maintain Poland’s investment attractiveness.

Today we are a leader

Poland still remains one of the most attractive destinations for foreign investors in Central and Eastern Europe, but 2024 brought a clear slowdown. The value of new greenfield projects  fell to USD 7.3 billion, which is 56 per cent less than a year earlier. The reasons for this phenomenon are mainly of a cyclical nature and result from the economic slowdown in Europe, and especially in Germany – for years the main source of direct investment capital in Poland.

Tempo after the inflow of capital decreases

Since the beginning of the political transformation, Poland has attracted USD 364 billion in foreign direct investment (FDI), which accounts for nearly 40 per cent of all inflow in Central and Eastern Europe. In recent years, our country has increased its share in the regional investment market – in 2015–2019 it attracted almost half of all investments (49%), and in the following years 2020–2023 it maintained this high share (48%).

However, the data for 2024 show a significant slowdown. The value of announced greenfield projects  decreased not only compared to 2023, but also compared to the record year 2019, when it amounted to USD 20.9 billion. The industrial sector, which is the most important for the growth of innovation and productivity of the economy, has been particularly badly affected.

In addition to the economic downturn in Europe, especially in Germany, high energy costs, geopolitical uncertainty and rising financing costs are contributing to the decline in capital inflow, which limit investors’ propensity to launch new projects.

Investment motives and access to the EU market

The PIE report points out that Poland’s attractiveness depends not only on labour costs or the availability of well-educated staff, but also on access to the market with its central location. The fact that Poland offers direct entry into the single market of the European Union is becoming increasingly important for investors. Capital from the USA and Asia is often located on the Vistula River precisely to benefit from duty-free access to the EU market – the so-called tariff jumping.

This means that part of the production carried out in Poland goes not only to the absorbent domestic market, but also to export within the community. In practice, foreign investments are therefore becoming an additional impulse for Poland’s foreign trade, strengthening the role of our country in European and global value chains.

Challenges to competitiveness

Poland is gradually losing the advantages associated with low labour costs. The minimum wage exceeded the equivalent of EUR 1 thousand – the highest in the region. Energy costs also remain high – Poland is one of the most expensive EU countries in this regard, which is due, among other things, to the high share of coal in the energy mix and the low use of RES.

The limited investment attractiveness is also influenced by the low level of physical capital per capita (approx. EUR 32 thousand) and the underdeveloped venture capital fund market. This, in turn, limits the financing of innovative ventures and inhibits the inflow of investments focused on new technologies.

Innovation and infrastructure as directions for development

Growing expenditure on research and development testifies to the progressive modernization of the Polish economy, although the intensity of R+D work (1.56 percent of GDP) still remains below the EU average.

Poland’s strategic location is also an advantage. Our country plays the role of a key logistics hub on the East-West and North=South axis. Polish seaports have doubled the volume of transshipments in the last decade, and Gdansk is among the top ten largest EU ports. This further strengthens Poland’s role as a place not only for production, but also for the export of goods to European markets.

Poland’s future competitiveness depends on its ability to attract investments based on knowledge and new technologies. This requires investments in R+D, automation and digitization of industry, and the development of energy and logistics infrastructure.

The direction for the future

As the authors of the PIE report emphasize, Poland should consistently develop its advantages in the areas of innovation and modern technologies. At the same time, it is necessary to reduce regulatory barriers and create flexible conditions for investors.

To maintain its position as a regional leader, Poland must not only attract capital, but also ensure that foreign investment fosters integration into European supply chains and supports exports, especially in  the high-tech sectors.

Source : The Polish  Economic Institute (PIE), „Atrakcyjność inwestycyjna Polski na tle Europy Środkowo-Wschodniej”, August 2025

Translated by IDC

JL