Poland - Economy

Until recently, Poland had a centrally planned economy that was primarily state controlled. Agriculture, however, was only partly socialized, with state farms and cooperatives accounting for 23% of the country's total farmland in 1984. Since World War II, agriculture's predominance in the economy has been waning; in 1990, it accounted for 16.2% of the NMP, compared to 22.7% in 1970. In 2000, its contribution to GDP was an estimated 4%, although in continued to employ about 28% of the labor force. Poland, with its sizable coastline, has become a maritime nation of some note, having developed three major ports on the Baltic and a greatly expanded shipbuilding industry, which in 1991 produced 53 ships. In 2003, yearly production was reported as 50 ships, about one-tenth the number of ships produced by South Korea and Japan, the industry leaders. In June 2002 the Szczecin Shipyards, considered an example of successful privatization declared bankruptcy. Although Poland has rich coal deposits, it lacks important natural resources, such as petroleum and iron ore, and must export in order to pay for the raw materials it needs.

During 1971–75, Poland's NMP increased by about 12.8% annually; the growth was, to a substantial degree, the result of credits from the West. After 1975, however, Poland's economic performance deteriorated because of excessive investments, internal market problems, several bad harvests, the worldwide recession, and the political upheaval of 1980–81. An economic growth rate of 2.5% annually during 1976–78 was followed by declines of 2% in 1979, 4% in 1980, 12% in 1981, and 5.5% in 1982, while the debt to Western governments reached nearly $25 billion by 1983, rising to $33 billion in 1991, when the total hard-currency debt reached $52.5 billion. During 1980–91, the GNP grew at an annual average rate of only 1.2%. Inflation averaged 54.3% annually in the 1980s.

With Poland subjected to the "shock therapy" of a transition to a market economy, GDP fell 31.5% between 1990–92 and consumer prices shot up almost sixfold. However, the economy did not stay down long as Poland's economy became one of the most robust in Eastern and Central Europe thanks to the government's tight fiscal and monetary policies. The economy grew by just under 7% in 1995, and by 5.5% in 1996 and 1997, for an average of over 5% a year 1994 to 1997. Most of the growth since 1991 came from the booming private sector, by 1997 for about 70% of GDP (up from 50% in 1992), due in large part to the creation of new private firms. Poland's pace of growth has declined since 1998, as the economy has been buffeted by the effects of the Russian financial crisis and then the global economic slowdown since 2001. In 1998, growth fell to 4.8%; in 1999, 4.1%; in 2000, to 4%; and in 2001, to 1%. Estimates for 2002 are for real GDP growth of 1.2% to 1.3%. Inflation shot up to 10.1% in 2000 with the recovery of oil prices, but in 2001 had moderated to 5.5%. Inflation is estimated at about 2% for 2002. About 72% of the economy had been privatized by 2002, and the government announced its intention to reduce increase this share to 85% to 90% by 2005. The major problems facing the economy are unemployment—which after decreasing for several years increased to 13% in 1999, to 15%in 2000 to 16% in 2001 to 17% in 2002—and persistently high fiscal deficits. On 7 June 2003, 75% in a vote with a 57.34% turnout (above the 50% minimum turnout required) voted "yes" to the referendum of Poland's joining the EU. Poland should become a member of the EU in 2004, although economists estimate that it will take decades for per capita average income in Poland to reach the EU average. Per capita income was about $4,800 in 2002 ($9,500 in purchasing power parity terms.)