Poland successfully managed its integration into the European Union since joining in 2004, and during the 2008-09 global financial crises it was the only member to experience growth. Poland is a high-income country with a large and diversified domestic economy. Read More »
Poland is increasingly acknowledged as a major player within the European Union (EU). With a population of about 38.2 million, and a per capita income of $12,660 in 2012 it is an important voice on many issues, as illustrated by the success of its EU presidency (second semester of 2011).
In the last several years, Poland has become the fastest growing economy in the EU and now has the largest economy in Central Europe. It is a decentralized country with solid institutions, and its economy is diversified and deeply integrated within the EU. In 2009, it was the only EU country to avoid a recession (thanks to a floating exchange rate regime, limited imbalances at the onset of the crisis, proper monetary and fiscal policy responses, and EU structural and cohesion funds). Following strong economic growth of more than 4 percent in 2011, Gross Domestic Product (GDP) growth slowed to 1.9percent in 2012 and further decelerated in early 2013, as renewed turmoil in the Euro zone weakened business' and consumers' confidence, leading to a drop in investment and stagnation in private consumption.
Poland's GDP growth is expected to decline to around 1.3 percent in 2013. Assuming that the external environment strengthens and investment increases (in the context of the new EU financial perspective) growth could reach 2.4 percent in 2014.
Inflation remains moderate, and living standards in the country are gradually converging to the European standards. However, Poland’s GDP per capita is only 63 percent of the EU average. Significant disparities of income remain between Warsaw (the wealthiest part of the country), Western provinces (typically well connected to the EU), and Eastern provinces (relatively poorer). Unemployment is on the rise in Poland, reaching 10.6 in 2012. This rate is expected to increase further until the end of 2013. The country is also rapidly aging: the share of the total population 65 and over is projected to increase from 13 percent in 2010 to 23 percent in 2030.
The external environment is also fraught with risks. The economy’s deep integration within the EU translates into vulnerability to the Eurozone crisis, and the authorities have taken a range of measures to effectively mitigate the risks of contagion.
The banking sector remains solid, profitable, and well supervised. This sector saw increases in profit of 4 percent over the record-breaking previous year. Furthermore, the slow depreciation of the zloty since the summer of 2011 has had the effect of strengthening the competitiveness of Polish exports at a time of shrinking markets.
In addition, the government has launched a broad range of reforms aimed at improving the Polish economy’s competitiveness in the medium-term, including enhancing the business environment by raising the retirement age (from 60 to 67 by 2040 for women and from 65 to 67 by 2020 for men) and by promoting innovation and modernizing public administration. Short of major negative developments within the Eurozone,
Poland is also benefiting from large amounts of resources from the EU structural and cohesion funds. Poland is the main beneficiary of these funds with €68.7 billion in the current financing period (2007-2013)—almost 3 percent of GDP per year. Thanks to strong leadership by key government officials, Poland has a solid track record on implementation, and is absorbing the resources available, at both central and subnational levels. The country is now preparing to maintain its performance in the next financial perspective (2014-2020).
Finally, Poland is increasingly engaging with other countries in their development efforts. Poland has gradually emerged as a donor over the last few years, and while its financial aid remains relatively modest in size, the country is stepping up its efforts to strengthen its aid delivery systems and to share its experience of a successful political and economic transition.
The World Bank Group’s role has changed over the years. In the 1990s and early 2000s, the World Bank Group had a large lending and analytical program in a broad range of sectors. With the country’s admission into the European Union (EU) in 2004, the situation changed significantly. In financial terms, IBRD’s annual lending represents a fraction of EU grants and European Investment Bank (EIB) operations.
The World Bank continues to provide financing in support of key reforms but is increasingly focusing its efforts on helping Poland access global knowledge in specific technical areas. Access to such knowledge serves several purposes: to inform and facilitate the design or implementation of technical reforms; to provide an outside perspective on specific issues; and to strengthen Poland’s contribution in relevant global debates. From the World Bank’s perspective, the partnership with Poland provides a good opportunity to transform itself into an effective “knowledge bank.” Looking forward, the challenge is to develop a sustainable, two-way knowledge partnership.
The World Bank’s Country Partnership Strategy for Poland (CPS) 2014- 2017 was presented to the Board in August 2013, and has the two-fold aim of: (i) fostering sustainable income growth for the bottom 40 percent of the population within the context of Poland's economic convergence process within the EU; and (ii) supporting Poland's emerging role as a global development partner. The WBG program is expected to remain very selective and demand-driven. It will rest on four strategic engagement areas, which are aligned with the "Europe 2020" strategic agenda of smart, sustainable, and inclusive growth and with the national development strategy. These four areas are:
equity and inclusion
Poland as a global development partner
This CPS is informed by the overall strategic goals of the World Bank Group. In a country like Poland, where extreme poverty is marginal, the WBG program is aimed at promoting shared prosperity - economic competitiveness, to spur economic growth in a difficult external environment – equity and inclusion, to ensure that the benefits of growth are enjoyed by the bottom 40 percent of the population - and climate action to support the sustainability of Poland's economic and social development. The CPS is also aligned with the Europe and Central Asia (ECA) Regional
The current portfolio consists of one investment project on flood protection on the Odra River; one Global Environment Facility (GEF) project on energy efficiency and safeguarding the environment; and three Prototype Carbon Fund (PCF) renewable energy projects that are expected to help reduce the cost of "greening" energy services.
In June 2011 the World Bank and the Ministry of Finance of Poland signed a new € 750 million ($1.11 billion) Energy Efficiency and Renewable Energy Development Policy Loan. This DPL supports the energy efficiency and renewable energy components of Poland’s implementation of the Energy Policy of Poland until 2030 program.
Poland joined the World Bank in 1946 as a founding member, and then withdrew in 1950 to re-join the institution in 1986. The Bank provided significant analytical and advisory services, as well as (starting in 1990) substantial financial resources — a total of $7.1 billion for 64 projects in areas such as environmental health, transportation and infrastructure, state-owned enterprise restructuring and privatization, energy efficiency and climate change mitigation.
There is a broad consensus that World Bank support was instrumental in supporting Poland’s successful economic transformation, its adoption of a market economy system, and its continued progress and economic and social growth since the early 1990s. This has translated into a large increase in incomes and living standards, in an environment of limited inequalities.
Recent results from knowledge services include:
Supporting Transition Toward a Low-Carbon Future
In late 2008, Poland engaged in implementing new EU policies on climate change mitigation: a 20 percent reduction in emissions by 2020, 20 percent of energy consumption to come from renewable energy, and a 20 percent improvement in energy efficiency. At the request of the government, the World Bank produced the report “Transition to a Low Emissions Economy in Poland,” which has been widely disseminated by the government. The analysis influenced the government’s Guidelines to the National Program of Greenhouse Gas Abatement in Poland adopted in August 2011. Government officials and local experts have applied innovative, economy-wide models to address critical economic questions, such as carbon leakage and competitiveness and the distributional effects of climate policies.
Recent results from financial support include:
Bringing People Out of Isolation in Rural Poland
In rural Poland, relatively limited access to services has left some people isolated and excluded. The Poland Post Accession Rural Support Project (PARSP) has delivered assistance to selected rural communities and vulnerable groups—especially youth, the elderly, and the disabled— to directly tackle this isolation. Under the Social Inclusion Program (SIP), over 10,500 contracts worth €36 million have been signed with local service providers to provide innovative social services to marginalized groups, thereby strengthening the capacity of 500 rural social services offices.
New kindergartens, women's groups and village associations have sprung up with cooking demonstrations and folk dancing groups. There are new activities for the disabled—many of whom had not been able to participate before. There are music programs and sports for youth. Seniors go on outings to parks and museums. Villagers connect more with one another and the wider world. Projects do not only build roads or hospitals, they also build human connections and create inspiration for people to reach out to others and improve their lives.
New road signs, crosswalks and traffic lights were installed on some major Polish roads, along new local driveways that were built off the highways to make the lives of local communities easier. For example, thanks to some new local driveways children can get on and off school buses inside school property instead of dodging lanes of traffic. Crosswalks on some of the national roads are now brightly lit at night thanks to an innovative solar systems, allowing drivers and pedestrians to see better at night and reducing the number of car accidents.
In addition to promoting safety, the project improved roads, increased the effectiveness of staff responsible for fixing and maintaining roads and highways, and established funding for maintenance. The percentage of Polish national roads that are in good condition increased from 49 percent in 2005 to nearly 60 percent in 2011. The length of the road network that can handle heavy trucks has more than doubled, significantly exceeding its target.