Poland’s first democratic elections 25 years ago marked the beginning of reforms that have transformed the country’s economic performance. GDP per capita has doubled since 1989, according to the World Bank. Supported by reforms that have fostered enterprise and encouraged inward investment, the economy was the only one in the European Union to continue to grow throughout the financial crisis.
When I first visited Poland for work at the end of the 1990s, I saw the determination of Polish leaders and businesses to build a prosperous future. Since then infrastructure, including road and rail links, has been improved. Levels of education have remained high with schools scoring above the international average in the most recent Programme for International Student Assessment tests. High skill levels combined with relatively low labour costs have attracted inward investment, particularly in areas such as manufacturing and information technology services.
Exporters also have an opportunity to branch out into increasingly sophisticated products
HSBC’s Global Research team estimates that the economy grew 1.6 per cent in 2013 and forecasts that it will grow 3.2 per cent in 2014. However, further reforms are needed to underpin long-term future growth.
Poland rose to 45 in the World Bank’s rankings for ease of doing business in 2013, up from 72 in 2009. Yet other nearby European countries including Lithuania, Latvia and Estonia are still ahead in the rankings.
The labour market in Poland is set to shrink over the next 35 years as the population ages, according to HSBC’s report The World in 2050. This could hamper economic progress. Research from the Organisation for Economic Co-operation and Development suggests that patterns of migration could compound the effect of demographic change.
As well as challenges, there are many opportunities for Polish business. When Poland joined the European Union in 2004 it gained tariff-free access to a market of hundreds of millions of consumers. Net exports were the main driver of national growth in 2012 and 2013.
Germany is currently Poland’s biggest trading partner, but economies in Asia, the Middle East and Latin America are likely to grow faster than developed economies over the long term. It is therefore not surprising that the Polish government is encouraging firms to seize the opportunities outside the European Union. Official websites educate firms about China and new markets in Africa. The government has recently organised trade missions to India and Turkey, helping firms make new contacts.
Exporters also have an opportunity to branch out into increasingly sophisticated products. Polish investment in research and development has been comparatively low in recent years. The country’s exports of high-technology goods will grow faster than its total merchandise exports over the next 15 years, according to the latest Global Connections report by Oxford Economics on behalf of HSBC.
Over the past 25 years Poland has shown that supportive policies can help create the conditions for long-term growth. The decisions taken today will help determine the country’s prospects for the next 25.