Poland’s status as a ‘European growth champion’ is overlooked, says economic expert
Poland’s remarkable economic performance is under-reported and is not receiving the attention it deserves, says portfolio advisor for investment strategists East Capital Eglé Fredriksson.
Describing Poland as a “European growth champion” in an article for European news site Euronews, Fredriksson points to the country’s uninterrupted growth since 1989, averaging 4.2 percent of GDP a year.
As a result of that growth, Poland has become the seventh largest economy in the EU with GDP at EUR 524 billion, while GDP per capita has risen almost eightfold to EUR 13,558.
Such an economic success is a combination of a large domestic market, early and deep reforms and prudent policies, including a consistent European Union strategy, Frederiksson says. She also highlights the large and growing small and medium-sized enterprise (SME) sector as an important source of growth.
Frederiksson cites a solid domestic consumption as one of the most important features of the country’s economy. Such consumption - an important component of gross domestic product – is backed by the government’s child welfare programme “Family 500 plus” that in effect increase households’ income by 2-3 percent annually.
Another GDP component which is crucial for Poland’s stable economic growth is large spending on infrastructure, heavily supported by an inflow of EU funds amounting to EUR 102 billion between 2007 and 2013 and a further EUR 106 billion in the 2014-2020 period.
With the country expected to continue receiving EU funding to the tune of around 0.8 percent of GDP a year even after 2020, this is just one reason why the real estate and construction sectors are booming.
Apart from a big infrastructure projects, one of the key drivers for Poland’s economy is a fast-growing video game development, Frederiksson says, showcasing CD Project Red as growing almost tenfold over three years to a market capitalisation of over EUR 5 billion.
On the downside risks, she mentions deteriorating demographics, ageing population and emigration, while the main external risk is a possible economic slowdown in other countries of the EU, including Germany – Poland’s main trading partner.
However, demographic problems are partly offset by steady inflows of Ukrainians and other immigrants from CIS countries, while Poland’s economy is less susceptible to a German slowdown comparing to previous years, Frederiksson says.
She ends with a wink to investors, writing: “The timing might be right for investors to finally capitalise on what the World Bank, in atypically ornate rhetoric, has termed the Polish ‘golden age’ of growth.”
This year Poland’s GDP will exceed $600 billion in nominal terms for the first time in history. In 1989 after the fall of communism GDP was $66, 895 million and in 2004 when Poland ascended to the EU GDP was $255.1 billion.
The unemployment rate stood at 3.9 percent last year, and was one of the lowest in the whole of the European Union.
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