In terms of gross domestic product (GDP) expressed in dollars, Poland ranks around 20-21st in the world, although per capita we are twice as far behind. Economists emphasize that we could permanently join the top 20 largest economies in the world, but this requires investments – not only larger, but also focused on modern sectors, such as technology. It is also worth encouraging building our own capital for investment. However, these are long-term tasks, and at the start, the new government must deal with restoring transparency and parliamentary and finance minister control over public finances.
“To think that the Polish economy could become one of the largest in the world, to be in the symbolic top 20, we should think not so much about current economic problems, but about long-term challenges,” says Dr. Krzysztof Piech, a professor at Lazarski University and the author of the “Opening Balance 2023” report. “First of all, we need to increase the scale and quality of investments, so that they are related to innovation, because you can earn a lot on innovations. Of course, this is not easy; many governments in the world have not handled such challenges, but sooner or later we will face them.”
According to IMF data, in 2022 Poland was 21st in terms of the size of GDP converted into US dollars. This year, as calculated by Rafał Hirsch on the Bizblog Spider’s Web portal, Poland should overtake Turkey and jump to 20th position. The main reason is the strengthening of the zloty against the dollar compared to the rapid weakening of the Turkish lira. In the “Opening Balance 2023” report, the author estimates that it will take at least a decade for Poland to join the G20, the world’s largest economies, assuming a sustained growth and exceeding 1% of the world’s GDP share can be achieved.
The unfavorable forecast is the rather slow pace of GDP growth in the last two years and expected for this year, as well as the low level of investment.
“The strategy adopted for the entire transformation period for our country was that investments are mainly to be attracted from abroad. This is quite understandable, as Poland’s capital base was quite low, but if we want to be a country that confidently looks into the future, we should generate our own investments that will drive our economic growth,” evaluates Dr. Krzysztof Piech.
Since 2021, the average value of investment outlays in the GDP of EU countries has remained at a stable average level of about 22%. In Poland, however, it is only 17-18%, which makes us third from the end, after Bulgaria and Greece. Poland has a less dynamic growth of investments in GDP compared to its neighbors.
“The reason for the low investments in our country is largely because we have little savings. Yes, we were able to attract investments from abroad, but we, as an economy, generated too few of them. We need to think about how to increase the scale of savings in our economy, and this can be done thanks to economic mechanisms,” says the author of “Opening Balance”. “We have had low interest rates for the past few years. In real terms, they were negative, one of the lowest in the world, which of course did not encourage saving. In terms of savings, we have been one of the last places in Europe for many years, the savings rate in Poland is one of the lowest in Europe for many, many years and this needs to change.”
In the “Opening Balance”, a particular emphasis is placed on the key role of savings and investments, especially in the area of innovation, in the convergence process, i.e., striving to level the economic development level between the countries. However, the so-called European innovation paradox is important – it turns out that the higher the public expenditure on innovation in a region, the more innovation drops there. Hence, the necessity to stimulate private investments. However, this requires domestic savings, and Poland is among the countries with the lowest savings rate in the Union. In the years 2020–2023, it averaged 21% in relation to GDP, which puts Poland in seventh place from the end in the community. The economist stresses that saving can be encouraged by tax reforms, financial education, and creating attractive savings instruments.
He adds that changes in this area will require a long-term strategy, but among the most urgent tasks is the restoration of transparency of public finances.
“The most important and most urgent tasks that the new government needs to introduce, is above all to check what is really happening in public finances, because a large part of these finances has been transferred beyond the budget, beyond parliamentary control. This urgently needs to be changed,” points out Krzysztof Piech. “Certain things we report to Eurostat, but then we do not have a detailed picture. Therefore, consolidation of public finances and transparency. In addition, planning what will be in the coming years, after one election and another, and giving actions a long-term perspective for economic growth, which we do not see yet for political reasons.”
