Competitiveness of Polish Economy
Perspectives for Euro Adoption
Magdalena Zając
Entry to the EU: Entry to the EU: 2004, May 1st2004, May 1st
Total area: Total area: 313 000 km313 000 km²²
Population: Population: 38,6 mln38,6 mln
Political system: Political system: RepublicRepublic
Currency: Currency: ZlotyZloty
Poland in numbers• Between 10 new EU Member States Poland is the largest country,• Poland is the first in terms of population, teritory and of potential
economic power,
• 38,6 mln people = 52% of EU-10 population,
• € 202 billions GDP = 45% GDP of EU-10• Polish GDP = 3,8% of the EU-25 GDP• Greates economy among EU-10
• Polish GDP per capita: € 5300 • EU-25 average € 21000
• If GDP per capita for EU-25 is 100%, for Poland it is only 46%
Country
GDP per capita in USD thous. by purchasing power parity
USA 37,6
UK 29,6
UE-15 28,7
France 28,7
Japan 28,4
Germany 28,0
UE-25 26,4
Czech Rep. 16,8
Hungary 15,7
Slovakia 14,5
Lithuania 12,5
POLAND 12,0
Latvia 11,5
GDP growth in 2004
9,1
5,5 5,44,9
4,4 43,1 2,7 2,5 2,5 2,3
1,6 1,2
0123456789
10
Geographical structure of Polish export in 2004
79,8%
3,5%
5,5%
7,0%
2,7%
1,5%
EU
Other
Developing c.
Former SovietUnion
EFTA
CEFTA
Geographical structure of Polish import in 2004
68,5%
5,3%
13,4%
9,7%
2,5%
0,6%
EU
Other
Developing c.
Former SovietUnion
EFTA
CEFTA
Main Polish export partners (2005)
Main Polish import partners (2005)
1. Germany 28,2% 1. Germany 24,7%
2. France 6,2% 2. Russia 8,9%
3. Italy 6,1% 3. Italy 7,0%
4. UK 5,6% 4. France 6,0%
5. Czech Rep. 4,5% 5. China 5,4%
6. Russia 4,4% 6. Czech Rep. 3,6%
Main benefits of Poland accession to the EU (1)
• Higher rate of economic growth,
• Growth of investment,
• Elimination of the last barriers for exchange of goods,
• Developing specialization, economies of scale, reduction of unemployment,
Main benefits of Poland accession to the EU (2)
• Reduction of investment risk,
• Boost of FDI flows,
• Drop of prices,
• Better quality and wider range of available goods and services,
• Improvement of Polish infrastructure.
Main costs of Poland accession to the EU
• Paying the membership contribution (but the net advantage to Poland)
• Increase in bureaucracy
• Brain drain
• Reduction in some sectors or enterprises
• Reduction in the number of Polish companies, but increase in the size
COMPETITIVENESS
• Following the international assesment of competitiveness in 2005 Poland occupied 51st position
• In the year 2004 60th position
• Change in position: + 9
COUNTRY POSITION Change 04-05
Finland 1 0
USA 2 0
Sweden 3 0
Germany 15 -2
Estonia 20 0
Slovenia 32 + 1
Cyprus 34 + 4
Malta 35 - 3
Czech Rep. 38 + 2
Hungary 39 0
Slovak Rep. 41 + 2
Lithuania 43 - 7
Latvia 44 0
Poland 51 + 9
The advantages: • high economic growth,• inflation level, • costs of labour in industry, • expansion of Polish
products in international markets,
• technical advancement attractiveness for foreign investors,
• well educated young people.
The disadvantages: • quality of public institutions,
infrastructure, • instability of the public
finance system, • high unemployment, • low employment.
Foreign Direct Investments to Poland between the years 1993-2004
(in million USD)
The accumulated value of FDI in Poland between the years 1993-2004
(in million USD)
Cumulative Foreign Direct Investment in Poland by country of origin
in mln USD (2004)
Country
Value of capital invested
Number of investors
TOTAL 84477,6
1 France 16026,1 101
2 The Netherlands 11454,2 126
3 USA 10163,7 118
4 Germany 10149,5 258
5 International 4648,7 14
6 UK 4337,2 56
7 Italy 4089,3 67
Maastricht convergence criteria• Planned or actual general government deficit should not exceed 3% of
GDP,
• Public debt should not be higher than 60% of GDP, • Inflation rate should not exceed by more than 1.5 percentage points
the average inflation of the three best EU performers, • The long-term interest rate should not exceed by more than 2
percentage points the average interest rate in the three best EU performers,
• Participation for a minimum period of two years in the ERM II. Over this
period the exchange rate of the domestic currency against the euro should be maintained within fluctuation bands not wider than +/-15% around a central parity.
Declared deadlines
ERM II EURO ZONE
Cyprus Since 2 May 2005 As soon as possible
Czech Rep. No declaration 2009-2010
Estonia Since 28 June 2004 As soon as possible
Lithuania Since 28 June 2004 2007
Latvia Since 2 May 2005 2008
Malta Since 2 May 2005 As soon as possible
Poland No declaration No declaration
Slovakia No later than 1st half of 2006 2009
Slovenia Since 28 June 2004 2007
Hungary No declaration 2010
Real perspective of euro adoption in Poland
• The years 2012 or 2013 seem to be most realistic for Poland’s participation in the euro zone,
• The most difficult criterion to be fulfilled is the level of general government deficit,
• Poland’s priority should be fulfilment of
Maastricht convergence criteria because these are a basis for a sound macroeconomic growth.
Thank you for your attention