Expanding Polish Economy Perseveres Amidst Putin's Threats
The Polish economy, under the leadership of Prime Minister Donald Tusk, has experienced a significant revival and is now one of the fastest-growing economies in Europe. Tusk, who was sworn in on December 13, 2023, after forming a coalition supported by several parties, has been instrumental in driving this economic renewal.
This economic renaissance is evident in various sectors. Polish government securities have returned an impressive 31% when combining income and appreciation, making it the top performer among 30 European governments. The Polish stock market today, tracked by Bloomberg’s large and mid-cap price return index, is up 49% this year in dollar terms, making it the No. 1 performer among 50 countries selling fixed-income securities over the past three years.
The zloty, Poland's currency, is also performing exceptionally well. It is the best-performing among the 23 most-traded emerging market currencies, appreciating 14% against the US dollar since Russia invaded Ukraine in 2022.
The Polish economy's growth is a validation of the EU's single market's free movement of goods, capital, services, and people. Household consumption in Poland has increased by 125% since the UK voted to leave the EU in 2016, outpacing the eurozone's 40% gain.
Poland's GDP, currently at €1.1 trillion, is projected to expand 3.3% next year and 3.2% in 2027, while the EU's GDP will show gains of 1.4% and 1.7% respectively. This growth has propelled Poland from No. 16 in GDP growth in 2023 to No. 2 this year.
The economy's success is not limited to the domestic market. More than 40% of the Polish stock market is represented by 35 financial companies, which lead all industries with a return of 73%. This growth has attracted investors, making Poland the No. 1 borrower among 50 countries selling fixed-income securities.
However, Poland's economic growth is not just a story of success. The number of Poles living abroad has declined from a peak of 2.54 million in 2017 to 1.5 million by 2023. This decline can be attributed to returning Poles disillusioned by Brexit, who are much wealthier than when they took jobs abroad a decade ago.
Poland's geographical position, sharing a border of over 483km with Russia and an additional 400km with Belarus, makes it a neighbour to battle-weary Russia. Despite this, Poland's economy has been growing for eight consecutive years since 2016 and is poised to keep growing for at least another three years.
Ukraine can take some comfort knowing that Poland, its steadfast ally, is becoming the economic pillar of Europe. As Poland continues to grow, it is poised to play a significant role in the European economy, providing a much-needed boost to the region.
In conclusion, Poland's economic renaissance is a testament to the power of free markets and the benefits of EU integration. It serves as a shining example of a successful economy in the face of geopolitical challenges and offers hope for other European countries seeking economic growth and stability.
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