4% growth expected next year, minister of finance Tadeusz Kościński tells Nicol Dynes.
After this year’s setback due to the coronavirus pandemic the Polish economy will return to growth and the real estate market with bounce back, says Tadeusz Kościński, Poland’s minister of finance and minister of development funds and regional finance, in an exclusive interview with Real Asset Insight.
“We’ll be rebuilding the economy and we expect positive GDP growth of 4% for 2021,” says Kościński. “Poland will be one of the first economies in Europe to be back on track and it will be one of the winners in the global supply chain, a world leader in shared services, which will create good quality jobs that in turn will boost the real estate sector.”
2020 had started well for Poland, with an 8% reduction in public debt and the first balanced budget since 1989. After the pandemic, however, the country will end the year with its biggest deficit in 30 years and in recession.
The forecast is for a 4.6% contraction in GDP this year, which, as the minister points out, is still better than the -7.6% in the Eurozone or the 11.3% contraction expected in the UK.
“We have learnt a lot of lessons this year and now we are quite confident,” Kościński says. “Hopefully by next summer the pandemic will be in the past and so will its economic consequences.”
What is important now is that the economy is moving in the right direction and will return to positive growth in 2021, he adds. To build on the current momentum, the Polish government is set to announce a package of measures to attract foreign investors and develop local capital markets. Long-delayed legislation to introduce REITs could be next, Kościński says.
‘We want companies to invest in Poland. Our message is that if you invest here, you don’t have to pay corporate tax. That’s something the real estate sector should look at.’
Tadeusz Kościński, Polish minister of finance
REITs bring liquidity to the market, make it less reliant on international capital, make local projects viable and introduce transparency. Yet, despite the strong case made by the industry, Poland’s Parliament has dragged its feet and it has not approved the relevant legislation. Polish pension funds are prohibited from investing directly in real estate, but REITs would allow them to gain exposure to the sector.
The turning point could come next year says Kościński. “REITs will be part of our plan to develop the Polish capital markets. We see a significant amount of liquidity in the market and many companies are investing in property. There clearly is a demand and there’s not enough supply. REITs are already on our radar.”
The government wants to include REITs in the number of products available to investors, but the process could be speeded up, he says: “If the real estate industry makes enough noise they could become top of the agenda.”
Poland is also on a mission to attract more investors and to clamp down on tax evasion. “We have no plans to increase taxes to finance our public debt,” Kościński says. “But we want a level playing field and will crack down on financial engineering schemes and close down loopholes. On the other hand, we want companies to invest in Poland and our message is that if you invest here, you don’t have to pay corporate tax. That’s something the real estate sector should look at.”
Before Christmas the government will announce new support measures aimed at international investors in addition to the existing ones, such as the whole of Poland being an investment zone and R&D projects only paying 5% corporate tax.
“We’re looking to offer as much as possible to international investors, but also to Polish expatriates to encourage them to come back with incentives and tax breaks, especially if they employ people,” says Kościński.