Poland Steams Ahead Amid Eurozone Turmoil
Countries in the south of Europe must be jealous of Poland’s high growth rates and stable politics.
While the world’s attention is mostly focused on bailout territory in the eurozone, there has been quite an economic success story in Eastern Europe. In twenty years since the end of communism there, Poland has climbed to sixth in Europe’s economic standing.
Due to a policy of rapid liberalization, the once desolate country has seen considerable economic growth and industry, especially after its accession to the European Union in 2004.
Poland’s tax regime is highly competitive. The highest income tax rate of 32 percent, low in comparison to Europe’s economic powerhouse next door, Germany, where the rate is 45 percent. Poland’s two tier system is also far simpler. There is no capital gains tax.
The country has an “A” or “A-” credit rating from the major rating agencies, something that countries as Greece and Spain can only dream of. They and other high debt nations in the south of Europe would be hard pressed to not be jealous of Poland’s performance at the moment.
Despite having an unemployment rate of 9.7 percent last year, it is less than half of what several of Poland’s European counterparts are experiencing.
While Greece’s hosting of the 2004 Olympics proved to be one of the financial nails in its coffin, Poland is benefiting greatly from cohosting this year’s European football championships. The country has witnessed a huge influx of tourists.
Also, in preparation for the tournment, transportation systems had to be modernized and stadiums built. This was done in an efficient manner which cannot quite be said for their cohosts in Ukraine. Efforts there were dogged by delays and the diplomatic spat concerning the incarceration of the country’s former president Yulia Tymoshenko.
From a political standpoint, Poland operates on a very level centrist approach, rather than choosing either side of the political spectrum that has shaped several Western European governments.
Poland’s ruling coalition does face challenges in pushing further reforms. Progress has been made in the areas of health care and national pensions but recent increases in strikes in the education and transportation sectors in response to trade union violations point to an unease among ordinary workers about the longer term effects of liberalization policies. Corruption is also still present across lower tiers of government.
At the same time, the ruling parties will need to garner more support if Poland is to join the euro in the near future.
According to a 2011 poll, 60 percent of Poles are against changing their currency. In the current climate, it is imagined that number may be significantly higher given the debt crisis that has brought the economic union to the brink of collapse.
For now, Poland will be the envy of most and possibly the provider for others in the future. But its work isn’t done.