Right, right - Left, wrong

When conservative PiS was elected to the first majority since free elections in 1989, most folks on the left side of the political spectrum forecast a sputtering economic climate for Poland. However, quite the opposite is the case.

The rating agency Moody's has recently adjusted upwards the economic forecast for Poland as domestic demand and overall fiscal performance outpace most other EU countries.

The Polish economy grew at 3.9 per cent in the second quarter, which outperformed previous expectations. Now, there is a good chance full year growth may post a 4.3% increase making Poland the envy of other countries around the world.
 

Mo' money, Mo' money, Mo' money

Predictions of economic growth seem to be continually readjusted upward by significant gains even though many economists warned that the right-wing Law and Justice party’s 2015 election victory would damage Poland’s economy.

Unlike debt redden America, Poland is on pace to limit their deficit to 2.5% of GDP down from an earlier forecast of 2.7%.

Poland continues to attract foreign companies to relocate there and there is no signs of a slowdown. 

Is Poland’s luck about to run out?

Lately, I’ve been writing about Poland’s shining economy. Poles skating through the global financial meltdown with healthy growth is amazing. However, I hinted at the close of last month’s column that Poland’s lucky streak might be near the end.

Well, what could go wrong you might ask.

Poland assumed the EU presidency on July 1, 2011. The timing is unfortunate because the tires are about to fall off the economic wagon of several countries. There is plenty boiling right near the surface regarding the finances of PIIGS (Portugal, Ireland, Italy, Greece and Spain). Stress in Europe is mounting, especially now that England is distancing itself from the Euro Zone and German citizens don’t want more of their tax dollars propping up failing member States.

Publicity wise, it would look pretty bad if countries started defaulting and the economic contagion started spreading like an epidemic while Poland held the six-month term presidency. Many economists say it is not a matter of if, but when countries go bust. If the Polish term as head of the EU can get through the end of December, then it will be Denmark’s headache when they succeed Poland at the helm.

But, what would really be devastating is forced radical changes in Poland’s own economy caused by misguided and mistimed EU rules and policies.

I think we would agree that during the midst of economic turmoil and massive sovereign debt across the western world now is not the time to implement programs and regulations that will hinder recovery and growth, or in Poland’s case cripple it’s strong economic footing.

Poland is a young democracy and making great strides fostering free markets and industries that were short on productivity during the Communist era. While the EU environmental activists call for the abatement of coal in Poland - the continuation of plentiful coal powering the heavy industries making up the largest part of Poland’s industrial output is not a situation any country can turn around on a dime. There is no other energy source close to the cheapness of coal. The major cause of Spain’s 21% unemployment and debt crisis for instance stems from their reckless speed at adopting exorbitantly expensive green energy.

Last month the Polish Ministry of Economy received some bad news. Major companies said if energy costs go up, heavy industry would cut production or pick up and leave for Asia and Africa. A large exodus in sectors like chemical, metallurgy, mining and cement are considered certain and will affect thousands of good paying jobs. That would plunge Poland into an economic calamity of its own.

Coal may not be the villain it is made out to be. It wasn’t too long ago when Time and Newsweek rang the alarm about the coming ice age, devoting nearly a dozen covers to the topic in the mid-1970s. This past decade has been the opposite – hysteria about global warming presumably caused by CO2 emissions. But, lately there has been increasing interest in our sun’s affect on global temperatures being way more potent than so-called greenhouse gases. Read this article - NASA Data Blow Gaping Hole In Global Warming Alarmism

Sunspots emit solar winds that heat the earth and last month the American Astronomical Society said the solar cycle is going into a hiatus meaning a lack of warmth producing sunspots. It might take as little as two years to determine if we’re headed toward another mini ice age like the Maulder Minimum experienced from 1645-1715 coming after the Medieval warm period which produced an abundance of food. Anecdotally, it snowed in Colorado on the first day of summer this year.

So, for Poland’s sake you’d think there is pretty good reason to hold off on expensive carbon dioxide permits that would debilitate one of the healthiest economies in the western world.

On the topic of fracking shale to capture billions of cubic meters of natural gas, Poland has another horde of enemies to fend off. While the prospect of becoming an exporting energy giant and removing itself and EU partners from the evil grip of Russia’s Gazprom, the environmental organizations are turning up the heat to impose a moratorium on this type of gas extraction like they were successful in doing across France.

Although there are worries about potential contamination of ground water, gas shale deposits are located several thousand feet below most water tables. If care is taken boring through the water table to get at the gas there is less danger of tainting well water.

Overall, one would think Poland was dealt a pretty good hand with coal and now the abundance of natural gas. But, changing the rules in the middle of the game might make Poland have to ‘Go fish’. Those increasingly colder winters in Poland have taking their toll on poorer folks freezing to death over the last couple years. Hot soup ain’t gonna be a substitute for much needed cheap energy.

Gold in them thar hill

Poland was the only EU country to escape the present recession and economic crisis. Industrial output jumped by double digits, while employment and wages are up and out pacing inflation. The discovery of natural gas shale fields that equal more than 300 years of the country’s consumption have major oil companies beating a path to Poland’s door. Then there’s a luxury goods market that is growing faster than any other European country and a debt to GDP ratio that is one of the lowest in the world. The Warsaw Stock Exchange had more IPOs (initial stock offers) than any other European exchange in the past 12 months including foreign companies clamoring to be listed. These are all admirable attributes envied by other countries.



What else could Poles ask for in economic terms?


How about hitting a motherload of gold and silver that was just confirmed in dolny Śląsk!


A few million years ago, way before brothers Lech, Cech and Rus came from the east to establish the Slavic nations, the Kaczawskie Mountains located in southwestern Poland were erupting with volcanic ash and lava flows that glowed in the darkness of night. The apocalyptic looking event heaved tons of wealth to and near the surface of the earth’s crust. Today, in the land of extinct volcanoes modern testing methods indicate substantial mineral riches not previously exploited since mining started there in the 12th century are ripe for the picking.


Mining has always been an essential part of the Polish economy and is one of the most time-honored professions in Poland. Through the centuries going deep under the earth was dangerous and often deadly. Although there is no caste system, Poland’s miners traditionally have been elevated to a special social station of their own. Not only for the Feast of St. Barbara (patron Saint of miners), but also for weddings, funerals and other important political or social ceremonies, miners wear an especially smart looking black uniform adorned with red feathers and act much the same as honor guards.


Perhaps the most wondrous and largest mine in the world is in Wieliczka. Salt is a very important mineral, which seemed absent in Poland until the 13th century when Saint Kinga a Hungarian princess on her way to marry King Bolesław threw her engagement ring into a Hungarian salt mine near her home only to have it found where she indicated Polish miners dig upon her arrival. For over 700 years salt had been scooped out of the depths where Kinga’s ring miraculously appeared.


At the Wieliczka works the vast subterranean chambers are adorned with statues, chapels, grand staircases, dining halls and even chandeliers carved entirely of salt. There is even a clinic for people with lung ailments since the salt laden air is antiseptic.


Although another underground city like the Wieliczka mine is not in the making 150 miles to the west, the little village of Radzimowice in the Kaczawskie Mountains just might add a ton of wealth to the Polish economy.


Stara Gora (the Old Mountain) is the name used mainly by geologists for the location, since it was formerly the place where gold, silver, iron and copper once were mined and remolded. Many mine shafts beneath the peak of Zelezniak bear testimony to the heyday of a once blooming town. Lately, the few inhabitants left take their chances and run farm tourism businesses in a region famous for its panoramic views, wine production and rare plants including orchids and gentian.


Last month four high tech borings nearly a half-mile in depth confirmed the presence of high-grade gold, silver and copper veins, which appear to be untouched in the extensions of the historic site. New veins were also discovered and include significant amounts of gold with about one ounce of gold per ton of earth.


The area has a long history of mining covering 1,000 years and anecdotal evidence suggests and that up to 18,000 ounces of gold were recovered from nearby rivers and shallow digs over the years.


Extensive underground shafts were developed in Radzimowice until the mine closed around 1930 due to low metal prices and the onset of the Great Depression. The underground workings were well documented during earlier mining operations and indicate that most of the ore was mined from six veins. During the 1950s some refurbishment of the mine was undertaken by the Communist government but ceased when the Kupfershiefer copper deposit was discovered at a different location.


With private companies free to explore with the profit motive incentives of capitalism, what was overlooked by the previous socialist regime’s central planning seems to be panning out rather nicely in a market where gold and silver have had a huge run up in value.


The energy and precious metal resources just recently discovered under Polish soil is bound to bring increased economic wealth to the nation just as the discovery of salt did 700 years ago. However, there is a sinister plot being hatched by EU environmentalists that might cripple the heavy industry and coal mining sectors of the Polish economy. The what else Poles could ask for question might just be requesting some sanity regarding EU carbon emissions policies. Stay tuned to this column for a look into the absurdia the environmental whackos may thrust upon the only shining economy of the western world.

Poles: No Appitite for Debt

nieprzyjemny smak

Throughout the economic crisis plaguing the world for nearly three years, Poland appears to be an island paradise surrounded by a sea of red ink flooding the world. As others found out the hard way, unwarranted risk and the bundling of financial derivatives are dangerous to all aspects regarding quality of life. The wheeling and dealing that caused the bubble to burst caused immense damage across the globe causing hardship, pain and in some countries - riots, with more to come.


Could nations have escaped the intensity of economic damage and the protests that are getting more hostile across the globe?

The unique circumstances in Poland imply the whole bloody mess was easy to avoid.

Readers of this column over the last few months will remember Poland was the only EU country to post Gross Domestic Product growth in 2009 when every other member of the 27-nation bloc declined by an average of more than 4.5 percent. Continued growth in 2010 made Poland the only back-to-back year winner of an expanding economy.

The reason Poland stands head and shoulders above its neighbors and the United States for that matter is due to three basic things: Disciplined banking principles, a sound government fiscal policy and perhaps most importantly a way more cautious approach to personal debt. Essentially, Poland’s economy profited from risk moderation on every level including how individual households conducted their financial affairs.

When the bubble burst in 2008 Poland’s household debt averaged only 16 percent of GDP. Contrast that figure with 109% for Great Britain, 70% in Germany, 80% in Japan and 95% right here in America.

While property prices continue to be at the heart of the world’s economic catastrophe, the Polish real estate market did fairly well to protect wealth instead of destroying it.



With out a doubt Polish housing stock and quality of life accelerated at break neck speed after the fall of Communism and state controlled economy. One thing that lagged behind during the transition to free markets was the mortgage industry. Consequently, most homes were purchased with cash from savings or what could be raised from relatives. Mortgages in most other EU countries constituted more than half of GDP, while in Poland it was scarcely 10 percent

The individual fiscal discipline demonstrated by Poles was matched by Polish banks, which maintained firm lending standards and rejected subprime loans. And, what a unique situation: Politicians kept their noses out of the lending arena.



Double digit increases in industrial output, along with vigorous job creation, increased exports and solid wages provided secure levels of Polish household income. That led to brisk consumption of goods and services creating a good economy. These are the factors that kept real estate values stable. Property values in Poland declined only a miniscule amount.



Happy Polish super star
Ewa Sonnet shows off  her assets

While families even in the USA were struggling with household finances, Poles actually increased their bank savings accounts by double digits. Those increased deposits kept the Polish banks strong on their own merits while bailouts were as common as perch in Lake Erie in other countries.

Foreclosures and nonperforming loans even through the worst part of the economic meltdown were significantly lower than 5 percent while other nations saw defaults of up to 30 percent or more.

If you remember back to the day of busia and dzia-dzia, you might remember they were more likely to plop down cash than to buy on credit. They were credit worthy, but they tended to avoid debt because they didn’t trust it. Given the fate of Poland during the 20th century one could never predict what tomorrow might bring except the comfort in knowing there was no debt hanging over their heads like the sword of Damocles.

Easy credit makes us fat and lazy expecting things to come easy. But, as they say: easy come, easy go. Poles comprise a lean, mean economic machine. Taking a lesson from Poland and trimming the taste for debt is a good thing for all nations to consider.

Smacznego certainly should not apply to a plate full of debt.

Reka reke myje

A long-term economic campaign encouraging Poles to buy national products called “Kupujnasze” (“Buy Ours”) has been launched today.

The co-initiator of the campaign Jacek Sadowski stresses it is about “affecting the economy in a real way,” immensely important at a time of finance crisis. He points out that 60 percent of GDP in Poland is based on domestic consumer activity.

“Kupujnasze.pl” is not the first such campaign in Poland. The previous one called “You supply jobs by buying Polish products” ("Kupując polskie produkty, dajesz pracę") was aimed at promoting patriotism-oriented consumer behavior.

Source: Polskie Radio 3-21-09

$$ BE NOT AFRAID $$

Polish businesses are not afraid of economic crisis! What crisis?

Polish entrepreneurs view 2009 with much hope. They plan further investments and anticipate job reductions will not exceed 1-2%.

This optimism is reflected in a recent survey by the Marketing Research Center showing that the majority of managers positively assess the condition of their companies. 70% of those polled expect a repeat or even an improvement of the results from 2008, while every seventh entrepreneur even plans to increase employment.

Mateusz Szczurek, head analyst at the ING bank, says the results of the poll augur well for the state of the economy: `Cutting interest rates, greater optimism among entrepreneurs, consumption demand - all these factors can help ease the problems facing Poland's economy.'

According to the poll, every fourth company plans new investments for 2009 and only 2%consider suspending open projects.

Source: Polish Radio 03.01.2009

What Economic Crisis?

Poland's individual consumption and ongoing modernisation of the economy will help the Polish economy to maintain relatively high growth, despite global slowdown, Monetary Policy Council member Andrzej Slawinski told public radio.

Talking about GDP growth, Slawinski pointed out that "the rate of individual consumption will hold at a decent level" and that "our economy is modernising fast."Poland will also be helped by low level of imbalances, with debt levels of households, corporates and the state still relatively low.

While offering no personal forecast for ther GDP growth, Slawinski described central banks' forecasts as more reliable than those prepared by commercial banks.Slawinski, what could be expected, declined to talk about further rate cuts. "It's too early to talk about a sequence and a scale," he said.

Source: Warsaw Voice, November 27, 2008

Drink up.... More

Last year Poles consumed more alcohol than ever before. It's the economy, stupid. Spending on hard liquor is up 15 percent while wages in Poland are up 10 percent.

How much does the average Pole consume? Around 2.56 gallons of pure alcohol annually, compared to 1.74 gallons in 2001.

I wish the stock market and my mutual funds had such an increase.

It's the economy, stupid

According to a report just published by the Central Statistical Office, Poland's economy continues to boom. In November industrial production was 8.3 percent higher than a year ago, productivity increased by over 6 percent and average pay by 9.2 percent.

State revenues were much higher than spending and in effect budget deficit was 80percent lower than expected.

Poland's unemployment continued to fall in November. The unemployment rate declined to 11.2 percent compared with almost 15 percent in the same period of last year.

Invasion Stopped

Recently, officers in Olsztyn intercepted a shipment of fake Polonez vodkas whose labels stated, "made for Poland" (not made in Poland).

The Sejm patched a loophole in the law that permitted sales of “knock-offs”. Approved now is an outright ban on trading fake goods.

Previously, truckloads full of fake Dior perfumes, Barbie dolls, bootlegged Marlboro cigarettes and various vodka brands, fake "branded" clothing and lingerie - were familiar sights for many Polish customs officials.

There is no word as for the quality of the knock-offs, but we would assume poor quality.

Won't you come home Bill Bailey

Poland will need to lure 200,000 workers back from the UK and Ireland if it is to get stadiums and facilities ready for the 2012 European Football Championship.

Economists have warned that work will need to be started now on the planning and building of the infrastructure. Poles living in the UK and Ireland, where many have gained experience on major construction projects, are expected to be the first to be targeted.

As well as stadiums, hotels and other tourist facilities, the Polish government has said it wants to use the event to make massive investments in transport infrastructure, including work on major roads and train stations and upgrades of railway lines.

Polish workers abroad have hinted they would willingly take lower wages or even work for free to help their country to prepare for the showpiece event. Paweł Pontowski, a Pole working in London, told a Polish paper: "As soon as the news was announced, my colleagues got together and decided we wouldn't be staying in England much longer.

The English are laughing and saying that, since all the Polish builders are here, there will be no one to build the stadiums in Poland. But when they see how tens of thousands of Poles will just vanish, their smiles will disappear."

The games are also expected to produce a boom in other local industries. Restaurant owners in the Polish capital Warsaw are reportedly preparing for a huge influx of tourists and football fans.

Enigma of the Polish economy

According to the opinion poll published in Rzeczpospolita newspaper, last year over 370,000 Poles moved to other countries in search of work. 3.2 million people would like to seek jobs in other countries. But, that many people are not going to go abroad and among those who do not all will find and keep a job according to experts.

Many people declare their will to leave the country, but if they all really did, Poland would have an economic crisis. Still the Polish economy suffers vacancies and the Ministry of Economy estimates that due to emigration national income may be getting lower.

Another problem for Poland is that military personnel are not re enlisting. The average pay is more than $100 short of the national median income of $900 per month.

Unemployment still hovers around 14% but certain jobs are hard to fill and some prisons have started work release programs to provide needed manpower.

A huge drop off in the number of postulates plagues the Catholic church.

With all this - The Polish economy is expanding faster than its EU neighbors and the Polish stock market is seeing gains making other European exchanges envious.

This is the enigma of the Polish economy.

Goldilocks Economy of Poland

Poland's 'Goldilocks" economy is luring foreign investors, winning credit-rating upgrades and pushing the currency higher. Economic expansion will be the fastest in a decade, along with one of the lowest inflation rates in the European Union according to government sources.

Poland's currency rose to 3.871 per euro outpacing the Slovakian koruna and Hungarian forint, which were among the world's top three performers in the past year. S&P upgraded Poland's long-term foreign debt rating to A- from BBB+.

The zloty may extend its advance as companies including Procter & Gamble Co., Dell Inc., and Ikea build factories and stores in Poland, and demand for the nation's exports increases.

Not too hot, not too cold. Just right for long term growth. Now, if the Polish economy could only find shoes to match.