The Fortune Teller

What does the future hold? I don’t know, nor do you and nor does your local fortune teller. However, plenty of folk are willing (or brave enough) to share their predictions for the coming year, especially in the economic sphere, including Jan Cienski, the Warsaw and Prague correspondent for the Financial Times who has been based in Warsaw since 2003. Last evening Jan treated the Oxbridge Society of Poland to his thoughts for 2013 and beyond concentrating, as one would expect from one who writes for the FT, on economic and political issues, and prompting some enthusiastic discussion. How does it look?

Well, from a journalistic point of view at least, not very exciting. As Poland becomes an increasingly normal and stable country there is less of the sensational for (serious) journalists to write about, especially when compared to the days during which the Kaczynski twins were president and prime minister and guaranteeing a regular flow of interesting copy. Under the current, less controversial, regime Jan, a former war correspondent, misses the sound of battle although, to be fair, from a historical perspective at least, you had a pretty good chance of seeing a battle in Poland in any given period. But no longer. Poland now clearly sees its place by Germany’s side (a sort of Canada to Germany’s United States, perhaps) as a major northern European country within the EU as it completes the transformation from an east European soviet satelite (albeit an unwilling one) to a modern central European democracy. Poland, which has suffered more than its fair share of invasions, wishes to grasp the chance to anchor itself once and for all at the heart of Europe and its eventual entry into the Eurozone is very much part of this process.

This explains why the Polish foreign minister commented last September that the United Kingdom should not look to Poland to help it sabotage the EU even going so far as to suggest that other members would bear a grudge against a country that has “selfishly” left the EU. Given that the UK welcomed Poles with open arms in 2004 (and well over a million arrived) when Poland joined the EU, something Radek Sikorski’s new chums in Berlin certainly did not do, selfish hardly seems the right adjective. Be that as it may, the United Kingdom, a country last invaded in 1066, and which has always taken a world rather than a little mittel Europaist view, clearly has a different perspective from one invaded more often and more recently and with (necessarily) more limited horizons. And, to be fair, Poland’s previous efforts to forge closer links with the USA, supporting the recent wars in Iraq and Afghanistan, and even allowing the CIA to operate a centre in northern Poland in connection with its “extraordinary rendition” programme, has brought Poland little return, especially in relation to the vexed question of visas for Polish citizens entering the USA. One more reason to turn increasingly towards Germany in place of a more Atlanticist approach that did not give Poland what it wanted.

Germany is, of course, Poland’s most important trading partner so it makes sense – not without irony, as I mentioned in Sweet and Sour – for Poland to become close to Germany. Germany is next door and Polish industry supplies many components for those desirable German manufactured goods driving the strong German export performance. While Germany prospers, so does Poland but the economy needs to have a much broader base than being a sub-contractor to German industry. And herein lies the challenge. Up until the current slow-down, much of Poland’s impressive growth has been the easy bit: inward investment based on lower labour costs, infrastructure spending supported by massive EU cohesion fund spending, general modernisation and catch up, and increased consumer spending. In future, generating economic growth is going to require the difficult bit: a rather more active approach as labour costs become less competitive and inward investors look to ever lower cost economies. This is a challenge faced by many advanced economies: how to create the conditions in which the innovation and creativity which will drive the next phase of economic growth thrive. In this area Poland is at a disadvantage lacking, for example, a single world class multi-national company or even a world class university, although it does have some very successful entrepreneurs and some very strong domestic companies.

For 2013 the outlook seems to be one of little growth in the first half, a slight picking up towards the end of the year with Poland returning to the 4 per cent per annum GDP growth which has been the average since the early 1990s. This should continue until 2020 as Poland’s economy catches up. Others, of course, are less optimistic believing that the need for the new “difficult bit” is now and not in 2020. Overall, however, Poland remains for once in its history in a good position. It has avoided a technical recession, its banking sector was spared the damage that occurred elsewhere, and its GDP per capita relative to the European average is higher than at any time in the nation’s history. Relative to many fellow EU members Poland’s immediate future looks bright but, then again, I am not a fortune teller.

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