This coming Sunday, Poles will elect a new government. In wake of its remarkable "Wirtschaftswunder" or economic miracle, Poland stands at a crossroads. After experiencing years of economic growth, it has the potential to achieve even greater prosperity, provided it opens up further to the world and manages to find pragmatic solutions to major conflicts with the EU.
Poland has experienced a kind of "Wirtschaftswunder" - "economic marvel". Over the past three decades, the country has emerged as a growth champion. The real Gross Domestic Product (GDP) has more than tripled, while GDP per capita has nearly quadrupled. The unemployment rate has reached an all-time low, and the debt ratio is well below the EU average—impressive achievements. Poland now stands as the sixth-largest economy in the European Union, a significant trading partner, and a competitive industrial location. Since 2002, the volume of trade has increased sevenfold, with Germany playing a pivotal role in Poland's import and export activities.
Success Factors of the Polish Economy
One of the key factors behind Poland's economic success is its commitment to economic liberalization within the framework of stable democratic institutions. This transformation was significantly aided by financial resources from the EU budget, which enabled Poland to develop its infrastructure and expand its education system. The country's appeal to foreign companies, drawn by low labour costs and liberal labour market policies, has further contributed to its economic prowess. None of this would have been possible without Poland's accession to the EU in 2004 and its full integration into the European single market.
Economic success is at the crossroads
Despite its high-income status, Poland faces a critical juncture. To sustain its growth, Poland must enhance its innovative capabilities, navigate the green transition, and reduce its reliance on coal while fostering a favourable investment climate. For this, it needs stability, reliability and transparency, for example in investment protection and legal certainty. High inflation and a shortage of skilled workers due to emigration and demographic shifts pose additional challenges.
"How Poland has mastered the transformation from a planned economy to a full market economy in the last 30 years is remarkable", says IW researcher Thomas Obst. "The Polish government should be as pragmatic about reforms after the elections as it has shown in the past.’’ This would allow Poland to remain an attractive investment location and continue to take advantage of its comparative cost distributions within European value chains.
In addition to these economic imperatives, Poland could benefit from easing conflicts with the EU concerning the rule of law, freedom of the media, and the separation of powers. "That would be the prerequisite for benefiting from the EU's reconstruction fund,’’ says IW researcher Samina Sultan. In view of numerous challenges and investment needs, these funds would be of great benefit and would provide incentives for necessary reforms. "The economic success story could only succeed by opening up to the world and the EU,’’ says Sultan. "This shows that Poland can only develop in partnership in the future as well.’’
German-Polish interdependencies are particularly important: an expansion of this relationship is in the interest of both sides and should be politically appreciated accordingly.
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