For anyone following the Polish economy, the
article in this week's Economist is a must-read. Compared to its neighbours - and indeed to the rest of the world - Poland is doing well. At the
BPCC's annual conference in Warsaw last week, four chief economists presented their growth forecasts for this year and next which were as synchronised as an air display team in formation. This year growth will be between 0% and 1%, next year between 1% and 1.5%; a tighter bunch of forecasts than what we'd been used to (last autumn the spread between optimists and pessimists was as much as five percentage points). Bear in mind that Poland's neighbours in the
CEE region are expecting their economies to contract by 3% to 15%. Indeed, a
perusal of
economic forecasts published by
The Economist suggests that Poland's economy will grow faster than ANY in Europe - and globally, will only be outperformed by China, India and Pakistan.
Why has Poland managed to avoid the worst of the global downturn? One
counterintuitative argument is that because Poland is a difficult place to do business, the size of the
pre-crisis 'bubble' was relatively small. And a reason it was smaller than in western Europe and the USA - and indeed in other
CEE economies - is that Poland's inflexible financial institutions were not bending over backwards to foist business loans and mortgages to people who could not afford to pay them back. More - banks would not lend to people who could afford to pay them back.
As a result, depending on sources, between 60% and 70% of Polish entrepreneurs have no debts, and finance their ongoing business activities from their
cashflow. And while 800,000 Polish households (mostly young and urban) have risky mortgages denominated in Swiss francs, another 12,200,000 households don't.
Poland is ranked 76
th in the
World Bank's Doing Business survey. Drill down into the data, and you'll see that in see that in terms of 'ease of starting a business', Poland comes 145
th in the world (out of 175 countries!) and 'ease of obtaining a construction permit', Poland comes 158
th - which places it among the economies of sub-Saharan Africa. Other surveys are less kind. The latest
Heritage Foundation/Wall Street Journal Index of Economic Freedom places Poland 82
nd in the world.
Poland's obstructive and decision-averse bureaucracy has held back the country from growing at an unsustainable pace. But this 'handbrake-on economy' cannot be held back at this time of global recession. The handbrake must be released if jobs are to be created and the huge demographic potential of Poland's young and well-educated workforce is to be realised.
Twenty years of democratically elected governments (of all hues) have failed to transform a bureaucracy that remains anything but a 'civil' 'service'. Roads do not get built, state-owned enterprises do not get privatised, EU funds do not get spent - because of the mindset of lower- and middle-ranking officials in Poland's ministries and government agencies. Part of the problem is that many of them are political placemen, who get a cushy office job for four years through connections with the ruling party. These here-today-gone-tomorrow bureaucrats are not experts in the area they working - nor do they have any ambition to be. What Poland desperately needs is a thoroughgoing reform of its bureaucratic workings, rather like the one implemented in Britain over a century and half ago - the
Northcote-Trevelyan* report which led to the establishment of a Civil Service Commission in 1855. This clearly set out the rules for a professional, apolitical administrative body to implement policies of elected governments.
(*Not to be confused with
Northcote-Parkinson, whose adage
'work expands so as to fill the time available for its completion' was coined a century later. It is as true in Poland's government offices as anywhere else on earth)
UPDATE: February 2010. The final figures for Polish growth have been posted; the economy grew by 1.7%! Faster than anyone could have dared imagine.
This time last year:
Jeziorki in bloomVisitors from the east