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Poland's strong economy


Poland's strong economy

Horse power to horsepower

Economic growth and a strong, stable government to boot: time to rethink old notions about Poland
Jan 28th 2010 | From The Economist print edition

OUTSIDERS often have fixed ideas of Poland: a big, poor country with shambolic governments, dreadful roads and eccentric habits. Old stereotypes die hard, but the facts paint an increasingly different picture. By the grim standards of recent centuries, Poland has never been more secure, richer or better-run.

It was the only country in the European Union to register economic growth last year, at 1.2%. As Jacek Rostowski, Poland’s finance minister, likes to point out, GDP per head rose from 50% to 56% of the EU average in 2009—a record jump. By the same (somewhat flattering) measure, which adjusts for the greater purchasing power arising from lower prices, Poland now has Europe’s sixth-biggest economy.

Foreign investors like what they see. Whereas supposedly “west” European countries such as Greece flounder, ex-communist Poland is borrowing cheaply, for example with a $4.3 billion (€3 billion) Eurobond issue this month. Lenders’ generosity allowed the government to run a budget deficit of 7% of GDP in 2009 (though officials promise that a new public-finance law will cut spending growth sharply in the years ahead).

These good results owe much to luck. Poland’s stodgy banks came late to the wild foreign-currency lending that proved so disastrous in such countries as Latvia and Hungary. Poland’s big internal market has cushioned demand. Stimulus measures in Germany have spilled across the border. But the country has also benefited from some canny political leadership. Poland has something rare in the EU and all but unique in its ex-communist east: a sensible centre-right government with a majority in parliament.
Many criticise the government for its caution, and more recently for sleaze (a scandal about lobbying by the gambling industry is outraging Poland’s puritanical media). Some long-term problems are unsolved, such as a low rate of participation in the workforce and patchy public services. As many as 2m Poles have voted with their feet by working abroad.
Even so, by the standards of Poland’s governments in the past, and of the rest of Europe now, the present lot look pretty good. The government has made inroads into some of Poland’s worst problems, notably with a tough, if partial, pension reform. It has belatedly started a programme to modernise roads and railways (2,000km of new fast roads will be built by 2012, when Poland and Ukraine co-host the European football championships).

It has also made some badly needed changes in the country’s stifling bureaucracy. Poland ranks low on most indices for friendliness towards business. A recent study by the World Bank put the Polish tax system at 151st out of the 183 countries it surveyed. But some improvements are under way, including online tax filing and faster customs clearance. A new law has liberalised the housing market, allowing short-hold tenancies. That should encourage Poland’s workers to move within the country in search of work, rather than emigrating. It can be easier to make a weekly commute to Britain by air than between Polish cities by road.

A big symbolic and practical change is that citizens can increasingly use a simple signed declaration (an oswiadczenia) instead of a costly, time-consuming notarised one (a zaswiadczenia) in their dealings with the state. “We assume that citizens are telling the truth unless there is evidence to the contrary. In the past, the reverse applied,” says Mr Rostowski. Sceptical Poles, scarred by their dealings with suspicious, nit-picking bureaucrats, may take some convincing of this.

A new Polish foreign policy has been a success, after a spell when the aim seemed to be to lose friends and alienate people. Under Radek Sikorski as foreign minister, Poland has managed to improve relations with all its neighbours and, despite some hiccups, won a favourable security deal from America under Barack Obama. After much haggling, a battery of American Patriot missiles will arrive in Poland in March.

Germany now claims that it wants its relations with Poland to be as close as they are with France. Guido Westerwelle, Germany’s new foreign minister, chose Warsaw for his first foreign visit. Poland’s relations with Russia, once equally neurotic, have calmed down. Even the unearthing of a Russian spy, who had been living for many years under a false identity in Poland, has caused only a ripple.

Some talk of Mr Sikorski as a future president. If he ran this autumn, it would solve a problem for the prime minister, Donald Tusk. Until he ruled himself out on January 28th, Mr Tusk had been dithering about whether to run himself against the incumbent, Lech Kaczynski.

Mr Kaczynski’s record is dire (his popularity rises only when he makes no public statements). His main role has been destructive, vetoing laws and blocking appointments. He is widely believed not to want a second term, but to have been pushed into it by his bossy twin brother, Jaroslaw, who leads the main opposition party, Law and Justice.

Mr Tusk wants to unseat Mr Kaczynski as part of a long-term plan to break up Law and Justice and absorb bits of it into his own Civic Platform party. But he was uneasy about relinquishing the prime minister’s job, especially as he hopes to trim the president’s power in future. Mr Sikorski is electable. He is Poland’s most popular politician and also something of an outsider (he was educated at Oxford; his wife is American; he has worked at a Washington think-tank). So he is no threat to Mr Tusk. As president, he might even help to dispel more of those tiresome stereotypes.

Re: Poland's strong economy

Many in US business circles believe that Poland is the future of the European Union.

Radek Sikorski will be President.

Re: Poland's strong economy

I spoke to a Polish guy today who is moving back to Poland with his family because he is fed up with the UK and the situation in Poland is much improved. So many have moved back.

Re: Poland's strong economy

Poland has been very good to me - emigrating was the best thing I ever did, even though it meant leaving a good job behind for an uncertain future.
Perhaps I was lucky or perhaps the Poles I met just judged me on what I could do, instead of the usual hide-bound criteria everyone tends to meet in their country of origin.