The Corner

Polish Lesson

Via the Financial Times (my emphasis added):

As EU leaders scramble to save the eurozone and cobble together policies to restore growth, Poland is solidifying its position as the union’s fastest growing economy. In its latest forecast, the European Commission predicted Poland would grow by 2.7 per cent this year, the fastest in the EU.

If that comes true it will build on what has been a startling economic performance in recent years. Poland’s economy recorded a 15.8 per cent cumulative expansion from 2008 to 2011, a period during which the EU as a whole saw its GDP shrink by 0.5 per cent.

Poland is now the most resilient of the ex-communist states that joined the EU between 2004 and 2007 – the Czech Republic has slumped into recession, while Hungary is negotiating a bailout with the IMF.

Andrzej Raczko, a former Polish finance minister and now a senior central bank official, says Poland’s performance has been down to strong domestic demand driven in part by consumers who respond to crises by spending rather than saving and a flexible exchange rate that helped buffer exporters. But he also credits a sensible fiscal policy that has brought the deficit under control without killing growth, an inflow of external funding including €67bn in EU funds for infrastructure and a healthy banking sector….

That flexible exchange rate is only part of the reason for Poland’s success (and the EU—wicked old Brussels—should be given plenty of credit for the support it has given Poland), nevertheless it’s an important element in the story, and one that would not have been possible had Poland been stuck in the single currency.

Fortunately, Poles have shed their early romanticism about that particular Utopian experiment. Now they are watching and waiting.

Let that wait be for a long, long time.


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