Travel Tips of Poland

ECONOMY

As the largest economy in ex-Soviet eastern Europe, the fate of Poland was, and still is, central to that of the whole region. The economic contribution of the agricultural sector declined steadily throughout the 1990s and now accounts for just 3 per cent of the GDP, but still employs one-quarter of the workforce. Livestock and meat are major export earners; rye, wheat, oats, sugar beet and potatoes are the main crops. In the industrial sector, Poland’s once substantial coal mining industry – like its counterparts elsewhere in Europe – has been scaled down in recent years. Other important industries are shipbuilding, textiles, steel, cement, chemicals and food processing. Again following the trend across the continent, industry’s contribution to the GDP has declined to below 30 per cent, while the service sector has seen rapid growth.
With the collapse of the communist system at the end of the 1980s, Poland adopted the ‘big bang’ strategy of rapid transition to a market economy: price controls (including subsidies) were removed at a stroke; production, distribution and trade were deregulated; large parts of the economy were privatized using a voucher system; the tax and fiscal systems were overhauled; and the national currency (the Zloty) was made fully convertible. The shock of these measures and the collapse of the Comecon trading system threw the economy into temporary crisis, but it recovered quickly and by the mid-1990s was growing strongly. Many of those parts of the economy still under state ownership – including several important industrial enterprises – were privatized, albeit at a more leisurely pace. By 2000 the private sector accounted for 70 per cent of GDP. Over the next two years the economy suffered mild recession, but by the end of 2003 growth had reached 3.4 per cent and is still rising. Inflation is currently just below 3 per cent. Unemployment, however, has risen consistently since 2000 to its current level of 20.2 per cent, which is one of the highest levels in Europe. This, in turn, has led to the growth of a large informal or ‘grey’ economy, in which as many as 2 million people may be engaged.
Poland became a full member of the European Union on May 1 2004 as one of 10 new entrants. The decision to join was endorsed by 77 per cent of the electorate in a June 2003 national referendum. Within the EU, Poland may be expected to work with its fellow members of the ‘Visegrad Group’ – Hungary and the Czech and Slovak Republics – who are also joining the EU. Where necessary, they will seek to protect their regional interests against the larger and more powerful Western European economies. Poland’s main trading partners are Germany and the ‘Visegrad Group’ countries. Trade with other members of the EU, including the UK, has already grown substantially during the last decade and is set to increase further.