Poland

19/05/2010
Worcester International Trade team's visit to Poland's Aviation Valley report - read more.

Poland has pursued a policy of economic liberalization since 1990 and today stands out as a success story among transition economies. Before 2009, GDP had grown about 5% annually, based on rising private consumption, a jump in corporate investment, and EU funds inflows. GDP per capita is still much below the EU average, but is similar to that of the three Baltic states.

Since 2004, EU membership and access to EU structural funds have provided a major boost to the economy. Unemployment fell rapidly to 6.4% in October 2008, climbed back to 8.9% by January 2010, but remains below the EU average.

In 2008 inflation reached 4.3%, more than the upper limit of the National Bank of Poland's target range, but fell to 3.5% in January 2010 due to global economic slowdown. Poland's economic performance could improve over the longer term if the country addresses some of the remaining deficiencies in its road and rail infrastructure and its business environment.

An inefficient commercial court system, a rigid labor code, bureaucratic red tape, burdensome tax system, and persistent low-level corruption keep the private sector from performing up to its full potential. Rising demands to fund health care, education, and the state pension system present a challenge to the Polish Government's effort to hold the consolidated public sector budget deficit under 3.0% of GDP, a target which was achieved in 2007-09.

The PO/PSL coalition government, which came to power in November 2007, plans to reduce the budget deficit in 2010 and has also announced its intention to enact business-friendly reforms, increase workforce participation, reduce public sector spending growth, lower taxes, and accelerate privatization.

The government, however, has moved slowly on major reforms. The legislature passed a law significantly limiting early retirement benefits. A health-care bill also passed through the legislature, but the legislature failed to overturn a presidential veto.

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