INVEST in POLAND

Changes that took place in 1989 had a great meaning for Poland, especially for the subsequent political and economical transformations. The introduction of the democratic system, the transition from the state-controlled economy to the free market one, and undertaking sweeping reforms were the driving force behind the new Polish economy.

The fundamental task for the newly-appointed government was to call the so-called „Balcerowicz’s Plan” into existence. Balcerowicz was the Minister of Finance then. The new plan for the improvement of the Polish economy resulted in liberalization of the domestic prices, considerable growth of the domestic import, sharpening the pay control and a new financial policy towards the existing companies. Another important task was to introduce interest rates higher than the inflation, as well as to apply the convertibility of the dollar and gradual work, and the stability of the dollar exchange rate.

Such far-reaching changes made the economy stabilize. In that situation the borders of the country became open to the global markets. The bank system and the monetary-credit policy finally faced thorough changes and reforms. The ownership transformations also had enormous significance, because thanks to them many companies became self-dependent, which as a result stimulated the free market competition. Those actions led to the formation of the capital and labour markets.

Consistent actions of the government made the Polish economy become one of the most dynamically developing ones in Europe.

Constant development of the Polish economy and preperation for the membership in the EU, which required sacrifice from many Poles, was the priority for the next governments.

The monetary policy, adopted through the whole period of changes, gave the Polish economy results in: the strong currency and gradually dicreasing inflation rate, which went down by from 43% to 1% (figures for the period of 1992 - 2003).

The achievements of the consecutive governing fractions in the economical arena resulted in creditors reducing the Polish debt by 50%, whereas foreign enterprises started investing in the Polish market. In 1991 the Stock Change was established in Warsaw.

The countries of the EU are currently the most important partners in commercial relations. Over 70% of the Polish export is done with the EU countries. Our import share with them is 60%.

The main driving force of teh Polish economy is the private sector, which produced 75% of the gross domestic product in 2001, employing 70% of Poles professionally active.

The privatization initiated in 1989 and the commercialization of the national economy were very crucial processes. Similarly to other EU countries, the branches connected with the heavy industry had enormous problems with the privatization. At present, the process of privatization is being introduced in groups of enterprises dealing with: the metallurgical, chemical, machine, power, gas, transport, and mining industries.

The changes adopted in the ownership structures of the economy and the proper market functioning needed appropriate legal ground for the development of free and conscientious activities of the market competition. In the late 90s that process was finished with the issued law, dealing with freedom of running business. It also included information about the norms of providing and monitoring social help in relation to a free flow of merchandise.

The corporation law, legally binding in our country since 2001, is completely compatible with the EU regulations, that concern the rules of registration and functioning of all the entities in the uniform Polish and foreign markets.

In the first quarter of the year 2004 the estimated increase of the gross domestic product was of about 5.5%. It is a higher value than the one expected by the government. The reason was an enormous increase of the industrial production, caused by the increase of export.

The increase of investment is very likely to happen in Poland. However, the final percentage result will be influenced by both economical and political factors.

The economic growth in 2005 and 2006 will probably be similar to the one in 2004.

Below we present the forecast for the years 2004-2006 gathered from the „National Development Strategy”.

Diagram 1. The dynamics of the gross domestic product in the EU countries and some candidating countries in the years 1995-2002

Diagram 2. The percentage of the debt of the Treasury in Poland in relation to the gross domestic product in the years 1991 - 2001

Source: National Development Strategy for 2004-2006; p.11

Diagram 3. Gross domestic product - change rate, previous year =100

Source:; National Development Strategy for 2004-2006; p. 36

Basic rates of social-economic situation in Poland in 2001-2006 (forecast)

Inventory	2001 execution	2002 estimate	2003	2004	2005	2006
			forecast
Population growth in thou.	265	265	250	200	185	115
Gross domestic product change rate	1,0	1,2	3,5	4,9	5,2	5,5
Relation of trade gap balance of payments to gross domestic product	4,1	4,0	5,0	5,2	5,7	.
Midyear inflation	5,5	2,5	2,3	2,8	2,5	2,5
Unemployment rate	17,5	18,4	18,3	17,4	15,8	15,0
Relation of budget deficit to gross domestic product	4,5	5,4	4,9	4,5	3,9	3,8
Relation of national debt to gross domestic product	43,2	49,8	52,5	54,2	54,0	.

Source: National Development Strategy for 2004-2006; p.41

Statistic data gathered from administrative news bulletins.