The crisis is accelerating our growth

Not only has the pandemic not halted Poland in its race to catch up with the richer European countries, but it has actually accelerated it. However, we are still facing many challenges ahead of us.

Publikacja: 07.09.2021 19:16

Foto: Edytor.net, Rafał Klimkiewicz

Grzegorz Siemionczyk

Poland's gap in terms of the country's economic development compared to the EU-15 states shrunk by 4 percentage points in 2020, while GDP per capita amounted to 72% of the average for these countries, compared to 68% the year before. Among the ten countries of Central and Eastern Europe, only Lithuania did slightly better, narrowing the gap by 5 percentage points. Poland's result is all the more impressive when compared to previous years. From 2015 to 2019. Poland's GDP per capita increased from 63 to 68 per cent of the EU-15 GDP. The development gap thus narrowed by 5 percentage points in that period, which was slightly more than in 2020 alone. At that time, in as many as five countries of our region, the process of economic convergence - or “catching up” with wealthier countries - was faster than in Poland.

The report of the Warsaw School of Economics and the Economic Forum, presented on Tuesday in Karpacz, describes how Poland and other CEE economies fared during the pandemic, what changes they underwent due to the crisis and what opportunities and challenges they are facing. This is the fourth edition of this publication, which - as pointed out by Mariusz Strojny, PhD, chairman of the report's editorial committee - is to be the most important cyclical publication devoted to the economies of our part of Europe.

Demography stabilising the labour market

The direct reason that explains why the convergence process in Poland gained momentum during the pandemic is that the recession in Poland was much milder than in most EU countries. In 2020. Poland's GDP declined by only 2.7 per cent (in real terms), while in the eurozone by as much as 7 per cent.

But why did Poland prove such a high degree of resilience to the coronacrisis? - There is no single reason. First of all, we still have a lot of catching up to do - more than some other countries in the region. And this is conducive to faster convergence. Secondly, the expansive fiscal policy helped to protect the economy and keep the employment level stable - explained Prof. Piotr Wachowiak, rector of the Warsaw School of Economics, which is the main partner in terms of content-related supervision of the Carpathian Economic Forum.

The expansive fiscal policy was made possible by the fact that at the onset of the crisis, Polish public finances were in good condition. According to the calculations of economists from the Warsaw School of Economics, in response to the pandemic the Polish government introduced as many as 55 fiscal instruments - more than other countries in the Visegrad Group. One of the results of such measures was a relatively stable situation on the labour market, which helped to keep consumer spending high. According to the report of the Warsaw Schoold of Economics, Poland was the only country in the region where the employment rate increased and the unemployment rate decreased in 2020.

Prof. Agnieszka Chłoń-Domińczak, PhD, professor at the Warsaw School of Economics and member of the editorial committee of the publication, explained during the presentation that the relatively insignificant impact of the crisis on the labour market was also due to demographic changes in Poland. The growing ageing population in the country means that it is increasingly difficult for companies to find qualified employees. This makes firing them risky. - We have witnesses the phenomenon where companies were holding on to their employees for fear that after the crisis they would have problems with finding new ones - commented the economist.

The region's upward climb in supply chains

Severe impact of the crisis in Poland was also averted by structural changes in the global economy, triggered by the pandemic. One of them is the global increase in demand for industrial goods, which was also accompanied by changes in supply chains. Poland and other countries in the region turned out to benefit greatly from such changes, which involved a greater emphasis by multinational companies on security and sustainability of supplies, rather than price. At the same time, disruptions in the existing supply chains have created space for new players, which have often been filled by exporters from our region. As a result, by December 2020, exports of goods from Central and Eastern European countries were 10 percent higher than in the previous year. In the case of intermediate goods (those used in global supply chains), their exports were up to 15 per cent higher.

This was despite the fact that, according to the analysis by researchers from the Warsaw School of Economics, 2020 was conducive to protectionism in the international exchange of goods and services. In 2020 - as in previous years - the number of new protectionist interventions in six countries that are important trade partners of Poland - was several times higher than the number of trade-liberalizing interventions.

The authors of the report point out that the loosening of fiscal policy during the pandemic in CEE countries means that they will need new sources of budget revenues in the years to come. In Poland, the government has already signalled that the new legislation with aim at a fairer distribution of the tax burden.

TRANSFORMACJA ENERGETYCZNA

Jak społeczności energetyczne zmieniają rynek i obniżają koszty

Dołącz do dyskusji

Some of the economic challenges addressed in the researchers' publication are not directly related to the pandemic. These include, for instance, the transition to green energy, as well as population ageing. However, the crisis will certainly affect how CEE countries will deal with these challenges. To give an example, as a result of the pandemic, the region can obtain more funds from the EU than before, a large part of which will be allocated to “making the economies green”.

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