After 1989, Poland embarked on a path of economic growth that, except for the pandemic year of 2020, it has not deviated from. Poles continue to work hard to match Western European countries in terms of wealth and socio-economic development. A natural reference point for Poland remains Germany – its wealthiest neighbor and largest trade and investment partner.
The Warsaw Enterprise Institute annually publishes the “Opening Balance” report, which comprehensively analyzes convergence processes based on economic and non-economic indicators. This year’s report introduces the Convergence Index, consisting of 13 components, each broken down into 4 subcategories, making it the most complex and multi-dimensional measure of development dynamics. The creator and author of the Index is Professor Krzysztof Piech, an economist and lecturer at Łazarski University.
Key Findings of the Report:
📍 Poland will catch up with Germany in terms of GDP per capita (PPP) by 2036 and the EU average by 2034. Even sooner, Poland will surpass Japan, achieving this milestone by 2027 – five years earlier than predicted last year!
📍 The pace of convergence is high but unsatisfactory. Poland’s Convergence Index stands at 45.1 points, compared to 50.5 points in neighboring Lithuania and 51.7 points in the Czech Republic. This places Poland in the upper half of transformation countries but still below the EU average.
📍 Acceleration is possible. If the report’s recommendations are implemented, Poland could accelerate convergence and reach Germany’s level by 2034.
📍 Claims of a “Polish economic miracle” are exaggerated. In 2023, 166 countries developed faster than Poland in terms of GDP. The previous year, 63 countries surpassed Poland, which also falls short of being considered a success.
📍 Poland outperforms Germany in some areas: health and happiness! The life satisfaction index in Poland is now higher than in Germany, partly because Poland also leads in healthy life expectancy. According to the latest data, Poles can expect 62.4 years of healthy life compared to 61.1 years in Germany.
📍 The foundations of the Polish economy, such as investments, are weakening. In 2023, Poland ranked second to last in Europe for investment rates, ahead of only Greece. Investments accounted for 17.7% of GDP, while the EU average was 22.1%.
📍 Lack of investments stems from a lack of savings. In 2023, the savings rate in Poland was just 3.3%, placing it just above Greece.
📍 Innovation is growing, but slowly. The innovation index rose from 0.30 in 2016 to 0.36 in 2023, but the EU average is 0.55. Sweden (0.73) and Denmark (0.75) remain leaders. The BERD indicator, which measures company spending on research and development, increased from 0.18% of GDP in 2005 to 0.96% in 2022, while the EU average is 1.52%.
📍 Poorly equipped workplaces. Polish workplaces suffer from underinvestment, limiting employee productivity. In 2023, the level of technical capital per worker was 11,486 PPS, placing Poland among the bottom three EU countries.
📍 At least labor is cheap. In 2023, labor costs in Poland were €10.5 per hour, significantly lower than in the Czech Republic (€17.0) and Slovakia (€16.0).
Source: Manager Plus
