Tuesday, April 20, 2010

Poland Emerges From European Economic Meltdown

The financial tsunami has knocked down one European economy after another.  Greece is one heart beat away from economic ruin, an EU cash catheter keeping it alive.  Greece is part of a new acronym of the economic down-and-outers, including Portugal, Ireland, Italy and Spain, all mired in high unemployment and low growth.   In Hungary, frustrations over the economy catapulted into power a far-right party equipped with its own Nazi-like guard.  All is not gloom and doom, however.  But the good news can't be found among the sophisticated, and seasoned economies of western Europe.  Rather it is the former East Bloc, Poland, to be exact, that has weathered the storm the best.  Remember the fears of the Polish plumber?

It wasn't a high number, but in a year of red and minuses, Poland's growth of 1.7 percent in 2009 looks pretty good. 

That was the highest in the whole of the 27-nation EU, which was mostly in "shrink" mode last year, according to EUbusiness.

According to Eurostat estimates, gross domestic product across the European Union shrank by 4.1 percent overall, with Poland's Baltic neighbours suffering severe double-digit contractions.

So what is the key to Polish success?

Well, Danske Bank economist Lars Christensen told AFP it had something to do with "good policy and a lot of luck."

The Poles are also lucky not to be handcuffed by the European currency, the euro. 

That allowed the Polish currency, the zloty, to head south and spice up Polish exports as even tastier on global markets. 

In late 2008 and early 2009 the value of the currency initially plummeted by some 30 percent compared to mid-2008, before recovering to around a 15 percent overall decline in value.

"Poland has benefited from being outside the eurozone in terms of competitiveness," Christensen says, noting its southern neighbor Slovakia, a member of the eurozone, suffered a decline in exports.

The Danske Bank economist expects Poland to see its GDP expand by 2.5 to 3.0 percent in 2010 and predicts fourth quarter growth could hit 4.0 percent.

In Lodz, and elsewhere Poles are asking what economic crisis.  Dell has moved much of its production from Ireland to this former textile city.  

Once it was Poland with hat in hand, begging the bankers from the IMF for coin. 

Now, the central bank has said no-thanks to a $21.8-billion credit line. 

"The situation with the Polish economy and the financial system is sufficiently good ... that it is not necessary to ask the IMF for a further extension of the flexible credit line," the bank said in a statement.

The IMF introduced the new system of flexible credit lines in 2009 as a safeguard against external shocks during the global economic crisis. Poland and Mexico both secured credit lines under this scheme whilst other countries needed loan arrangements.

In what would have been inconceivable a decade ago, Poland now wants to loan the IMF money to "help other countries overcome the effects of the global crisis."

Some in the blogosphere, are linking the Polish plane crash in western Russian on April 10, when the president and 95 other Polish elites perished, with Warsaw balking at the IMF money. 

More cruel coincident rather than conspiracy, in the opinion of the Informant.

While the country mourns the loss of its president and others, the economy just seems to reap more benefits.

Poland will receive money back from the EU after exceeding economic growth forecasts for 2007-2009. 

That will translate into a 633-million-euro windfall over the next year. 

The Czech Republic and Slovakia will also get a refund, proving the former Communist countries can teach their more experienced capitalist cousins further west a thing or two.

Fearing dirty east Europeans would swoop in and grab up jobs, France voted in 2005 to nix the EU constitution.  The Poles took it all in stride, and launched an ad campaign to lure the French to Poland, featuring a buff Polish plumber. 

Now, the Polish plumber is taking his wrench home, along with legions of other Poles, who sense their country just might have turned the economic corner. 

If Poland's economic pistons keep firing on full, maybe it will be the Poles who will have to fear an invasion of the wretched poor from the West.

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