The Polish economy has shown rapid progress in the past one decade (from the 1990s) and today stands out as one of the most successful and open transition economies. The privatization and liberalization of small and medium state-owned companies and the establishment of new firms marked the rapid development of a private sector which is now responsible for 70 percent of the Polish economic activity.
Rapid growth in gross domestic product since 1992 has also increased Poland’s stature in the world economy. Poland’s rapid development began over a decade ago in the 1990s. Between 1995 and 2000, the average annual growth of global GDP was 3.1 percent, while in Poland it touched 5.5 percent. Throughout the past decade, Poland has shown an upward trend in its GDP.
Observing the progressive development of the country, the 2014 index of Economic Freedom reports shows that Poland’s economic freedom score is 67.0, making its economy the 50th freest in the 2014 Index. Its score is 1.0 point better than last year, reflecting improvements in six of the 10 economic freedoms including business freedom, investment freedom, and trade freedom. Poland is ranked 23rd out of 43 countries in the Europe region, and its overall score is above the world average.
Over the 20-year history of the Index, Poland’s economic freedom score has advanced by about 16 points, a top-20 improvement. With increases in nine of the 10 economic freedoms and no declines, Poland has risen since 2002 to the rank of “moderately free.” Structural reforms include trade liberalization, privatization, implementation of a competitively low corporate tax rate, and modernization of the regulatory environment. Poland has achieved its highest economic freedom score ever in the 2014 Index.
Poland has taken steps to restore fiscal discipline despite a challenging economic environment. Continued reform, particularly to strengthen the independence of the judiciary and eradicate corruption, is needed to solidify the foundations of economic freedom and ensure progress toward greater prosperity.
Unlike other countries, Poland has not encountered a mid-course depression, its currency has not been subject to speculative attacks, and the economy has slowed down only modernity in the aftermath of the Russian crisis. The success of Poland’s economic transformation comes from well orchestrated combination of sound financial policies and perseverance with structural reforms.” But the road so far has been by no means easy, and has been arduous and risky. Poland has had its ups and downs. On the trade front, Poland has been doing exceptionally well; in the last one-decade, Poland’s foreign trade has grown more than two-and-a-half times, with imports and exports averaging 6 percent and 5 percent growth, respectively (World Trade Organisation data).
Today, the country is considered to have an edge in transformation and accounts for almost a quarter of overall international trade of Central and Eastern Europe. Ten of the top European Union member countries are among the leading trading partners of Poland; of which Germany is at the top of the ladder followed by Italy and France.
Trade has spearheaded the country’s integration with the European Union which is currently the main priority of Poland and is affecting most aspects of its economic policies. However, Poland’s outsized current account deficit and restrained inflation also have equal precedence.
Due to its strategic location in the hear of Europe, Poland has taken the leading position in foreign direct investment. As an indispensable element of political transformation, privatization constitute an instrument of Poland’s long term economic policy. It provides a basis for acceleration of economic development, restructuring, and modernization of the economy. The present economic environment in Poland is now in sync with its accession to the EU in 2004.
