Scoring growth can be child's play in EU top performer Poland

22nd October 2009, Comments 0 comments

Before the crisis, GDP growth in Poland, which joined the European Union in 2004, peaked at 6.7 percent in 2007. Experts predict a return to 4.0 to 5.0 percent annual growth as the world economy recovers.

Warsaw -- Scoring growth despite the world recession is child's play for some global companies operating in Poland, set to top both the 27-member EU and 30-nation OECD with near 1.0 percent GDP growth this year.

"In Poland we are planning to grow 70 percent this year," Michael Ebbesen, of Denmark's Lego Group toymaker told AFP recently in Warsaw.

"In Poland's growing economy we are far above the growth we see in other places of the world," he said of his impressive sale figures.

Ebbesen expects the dynamic development of an ambitious middle class in the ex-communist country of 38 million to fuel a buoyant market for decades.

Before the crisis, GDP growth in Poland, which joined the European Union in 2004, peaked at 6.7 percent in 2007. Experts predict a return to 4.0 to 5.0 percent annual growth as the world economy recovers.

"We are seeing a lot of potential in Poland not only this year and next year but also in the next 30 years," Ebbesen says, noting it will take that long "before Poland will be at the level (of per capita income) Holland was in 2007."

While sectors of the Polish economy such as construction, auto-making and heavy industry geared to exports suffered in the global downturn, innovative technology firms are in good shape, some even booming, according to Agnieszka Durlik-Khouri of the Polish Chamber of Commerce.

Boasting the world's largest cancer data and bio bank, the home-grown Read-Gene SA is one such success story.

"We are working in the field of clinical genetics of cancer focused on prevention, surveillance and treatment of cancer patients depending on their genotype," Read-Gene CEO Professor Jan Lubinski told AFP.

Read-Gene initially floated shares on the Warsaw Stock Exchange's New Connect bourse for innovative firms in February 2009, near the peak of the global crisis.

"We gained exactly 100 percent within eight months. At a time when it's difficult to grow on the stock exchange, we've never gone below our entrance price," Lubinski said proudly.

French capital-backed Alior Bank which launched operations in Poland in November 2008 near the height of the financial crisis has also prospered.

It has since wooed 225,000 clients, gaining 3.2 billion zloty (753 million euros, 1.1 billion dollars) in deposits and extending 2.5 billion zloty (588 million euros, 865 million dollars) in credit.

"Obviously there are important challenges going forward, but I remain quite optimistic on Poland," World Bank economist Thomas Laursen told AFP. "Once the global economy and the European economy get going again Poland, I think, will do really well."

Having entered the crisis with "relatively sound macro-economic fundamentals and a relatively healthy financial system" Poland has fared better than others, Laursen said.

"The budget deficit was relatively low, the current account deficit similarly relatively low, inflation was low."

Steady demand on Poland's large domestic market and its relatively low dependence on exports made it less vulnerable as the recession crippled trade.

The flexible exchange rate of Poland's zloty currency, which suffered a sharp depreciation at the onset of the crisis, also helped absorb shock in the export sector, Laursen noted.

While praising government and central bank policy responses to the crisis, Laursen warned that deep public spending reforms are crucial to rein in a deficit that will hit about 6.0 percent of GDP this year and 7.0 percent in 2010 as the crisis gobbles up projected tax revenue.

The bloated deficit has also forced Poland to drop its 2012 target for euro adoption.

But as the only EU economy to escape recession, Laursen believes "Poland will be seen in a new light among foreign investors as the crisis subsides."

Slawomir Majman, chairman of Poland's PAIiIZ foreign investment agency, couldn't agree more.

While declining to predict whether foreign capital inflows this year will equal the 11 billion euros (16 billion dollars) invested in 2008, Majman points out two factors making Poland attractive despite its notoriously poor transport infrastructure and sticky red tape.

"Poland is eligible to receive 100 billion euros in EU structural and cohesion funds over the next four years -- that's a huge incentive for every foreign investor," he told AFP.

"Poland is a relative winner of the crisis -- all of a sudden we've become the European leader in coping with the crisis. We are now delivering a product to investors which is in short supply in Europe and it’s called economic stability -- it's as simple as that."


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