Poland’s economy bests its neighors’
WARSAW, Poland — For most of the world, 2009 was a year best forgotten, but in Poland it was a year of enormous success, leaving the country the only member of the European Union not to fall into a recession during the global economic crisis.
“We are aware of how large a difference it is to live in a country hit by the financial crisis with living in a country which is passing though this time with stability,” Donald Tusk, the prime minister, said in his final news conference of the year. “During this year, when I was visiting other capitals, everywhere I would see envy in the eyes of our foreign partners, that my capital was Warsaw and that I had the job of being prime minister of a country which was the best able in Europe to deal with the crisis.”
And 2010 promises to be similarly outstanding, with most predictions calling for Poland to again have the fastest growth in the EU. Poland’s finance ministry expects growth next year to come in at 1.5 to 2 percent, but most economists think that number is very conservative. A member of the central bank’s interest rate-setting Monetary Policy Council recently predicted the economy would expand by as much as 4 percent in 2010.
“The year will be better than we expect,” Tusk said. “That doesn’t mean it will be paradise on earth, because on a global and European scale it will still be a difficult year.”
Poland’s performance has even surprised professional optimists like Jacek Rostowski, the finance minister, who notes that the country is doing far better than usual when measured against the performance of neighbors like Germany. Normally, Poland has grown by about 4 percentage points faster than much wealthier Germany, which is to be expected for an economy catching up to Western standards of living after more than four decades under communism.
But in 2009, Germany’s economy is expected to shrink by about 5 percent, while Poland’s central bank thinks that Poland will do better than 2 percent expansion in 2009 — which makes Poland’s growth rate about 7 percentage points faster than Germany’s.
Rostowski calls that difference “extraordinary.”
That sort of a gap will not be repeated in 2010, as Germany is expected to grow by about 1.6 percent in 2010, but Poland’s economy will continue its steady climb.
Poland’s growth at a time of general stagnation has pushed its economy ahead of that of the Netherlands, which means Poland now has the sixth largest economy in the European Union, commensurate with its position as the sixth most populous country in the EU.
The startling economic performance in 2009 gave a big boost to the government. Rostowski and Tusk held news conferences where the rest of Europe was shown as a sea of recession red, with Poland the lone green island of economic growth.
The unexpected resilience of the economy was due mainly to private business, which proved able to take the downturn in its stride.
A symbol of its resilience could be seen in Leszek Czarnecki, one of Poland’s richest men, who was facing a crisis a year ago. His property development company, LC Corp., halted construction on an ambitious project to build one of the country’s tallest skyscrapers in the western city of Wroclaw.
Meanwhile, Czarnecki’s bank, Getin Bank, was facing huge troubles because it had been one of the most aggressive lenders in foreign currency denominated loans — mostly in Swiss francs — to Poles eager to get in on a booming real estate market. That model collapsed after the fall of Lehman Brothers in September 2008, which froze access to international credit markets and forced Polish banks to restrict lending.
But by the summer of 2009, crews were back on the job in Wroclaw, and Czarnecki’s bank had survived the credit squeeze. Getin Bank now lends almost only in Polish zlotys, but Czarnecki’s banking group has managed to turn a 230 million zlotys ($82 million) profit in the first three quarters of the year — a decent result albeit a fall from the 443 million zlotys ($158 million) it made in the same period a year ago — before the crisis hit.
“Poland didn’t have a crisis, what we had was a slowdown in growth,” said Czarnecki.
The trick for the government in the coming year will be to ensure that the higher spending caused by the slowdown does not throw public finances into a crisis. The budget deficit is growing quickly and public debt could cross 55 percent of GDP, the level at which the law calls for measures to bring spending back under control — something that will be difficult to do in a year when Tusk is expected to run for president.
But compared to the gloomy year in store for Ireland, Spain, Greece and the Baltic countries, Poland’s problems are much smaller in scale.
“A year after the height of the crisis, the same politicians and economists who then predicted a complete economic collapse, are now winding up a new spiral of fear,” Rostowski wrote in a Christmas letter to the Gazeta Wyborcza newspaper. “Unfortunately, they are again ignoring hard data, which places Poland in the group of countries with a relatively safe level of debt.”