How Poland Keeps Its Economy Booming
In the 20 years since the end of communism, Poland has not been in recession — not once. And projections say it could ride out the current crisis as well.
How do they do it? Warsaw University economist Grzegorz Gorzelak says there are several answers. “One is, it’s a miracle. And you don’t interpret miracles, they just happen.”
More seriously, Gorzelak says there’s too many things going right in Poland to pick just one reason for the strong economy.
By European standards, Poland is a big country with a strong demand for domestic goods. That keeps the economy humming. And when domestic demand has faltered, exports to the rest of Europe pick up the slack.
And, yes, having a free floating currency — the zloty, not the euro — has also helped to keep exports competitive.
Another factor is good banking regulations. Gorzelak says Polish law prevents foreign banks from taking capital from Polish subsidiaries in order to cover their losses somewhere else. So while other countries struggle with a lack of credit, Poland still has money to lend for homes and businesses.
But Gorzelak also gives the country’s leaders credit for simply using the power of positive thinking.
“Polish government also played a very good propagandist role. They were saying, what crisis? We don’t have crisis, Poland is safe, which was very fortunate because economy is a psychological sphere and if you are being told that you’re going to have a crisis, you save money and you don’t spend and then you have a crisis.”
The Polish economy also benefits from a young and tech-savvy workforce that, now that the rest of the world is in the doldrums, doesn’t have to go abroad for jobs.
They work for companies like Polcode — a web developer that does the dirty work of building databases for small websites in the US and Canada.
Wojciech Hyzopski is the company’s vice-president: “When I came to Polcode, there were eight people four years ago. Now, we hire 64.”
He says, his company has benefited from the global downturn.
“We are doing well. The recession isn’t very harmful for us, because we are cheaper for West Europe or USA clients so they are more likely decide to outsource their job to Poland.”
But it’s not all computers. The economic boom in Poland even reaches down to what people eat…
Tucked among the communist era apartment blocks in Warsaw, there’s a small shop selling organic vegetables, high-quality meats, and artisan cheeses direct from small Polish farms. The owner is Ola Turkiewicz.
“My mission is to make people aware they can make informed choices when it comes to food. They don’t have to buy — can I say that? — crap. For me, that mission is also to support the local economy — local meaning the Polish economy.”
It’s the kind of boutique-y philosophy that wouldn’t be out of place in gentrified Portland or San Francisco. But it’s unique for gritty Warsaw and Ola’s store has quite a following.
“I don’t think this store would exist if we had more economical problems,” she says. “It is definitely the indication that Poland is doing not so bad.”
No Pole will argue that the country is a finished product but there is an idea here that Poland is a green island in Europe. Credit agencies are considering improving Poland’s debt rating, which stands in stark contrast to their neighbors in the west.
But whether the Polish miracle can keep the rest of Europe’s troubles at bay remains to be seen — especially if and when the country joins the eurozone.