Competitiveness of Polish Economy Perspectives for Euro Adoption Magdalena Zając.
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Competitiveness of Polish Economy Perspectives for Euro Adoption Magdalena Zając
Entry to the EU: 2004, May 1st Total area: 313 000 km² Population: 38,6 mln Political system: Republic Currency: Zloty
Poland in numbers Between 10 new EU Member States Poland is the largest country, Poland is the first in terms of population, teritory and of potential economic power, 38,6 mln people = 52% of EU-10 population, € 202 billions GDP = 45% GDP of EU-10 Polish GDP = 3,8% of the EU-25 GDP Greates economy among EU-10 Polish GDP per capita: € 5300 EU-25 average € 21000 If GDP per capita for EU-25 is 100%, for Poland it is only 46%
Country GDP per capita in USD thous. by purchasing power parity USA37,6 UK29,6 UE-1528,7 France28,7 Japan28,4 Germany28,0 UE-2526,4 Czech Rep.16,8 Hungary15,7 Slovakia14,5 Lithuania12,5 POLAND12,0 Latvia11,5
Main benefits of Poland accession to the EU (1) Higher rate of economic growth, Growth of investment, Elimination of the last barriers for exchange of goods, Developing specialization, economies of scale, reduction of unemployment,
Main benefits of Poland accession to the EU (2) Reduction of investment risk, Boost of FDI flows, Drop of prices, Better quality and wider range of available goods and services, Improvement of Polish infrastructure.
Main costs of Poland accession to the EU Paying the membership contribution (but the net advantage to Poland) Increase in bureaucracy Brain drain Reduction in some sectors or enterprises Reduction in the number of Polish companies, but increase in the size
COMPETITIVENESS Following the international assesment of competitiveness in 2005 Poland occupied 51st position In the year 2004 60th position Change in position: + 9 COUNTRYPOSITIONChange 04- 05 Finland10 USA20 Sweden30 Germany15-2 Estonia200 Slovenia32+ 1 Cyprus34+ 4 Malta35- 3 Czech Rep.38+ 2 Hungary390 Slovak Rep.41+ 2 Lithuania43- 7 Latvia440 Poland51+ 9
The advantages: high economic growth, inflation level, costs of labour in industry, expansion of Polish products in international markets, technical advancement attractiveness for foreign investors, well educated young people. The disadvantages: quality of public institutions, infrastructure, instability of the public finance system, high unemployment, low employment.
Foreign Direct Investments to Poland between the years 1993-2004 (in million USD)
The accumulated value of FDI in Poland between the years 1993-2004 (in million USD)
Cumulative Foreign Direct Investment in Poland by country of origin in mln USD (2004) Country Value of capital invested Number of investors TOTAL84477,6 1France16026,1101 2The Netherlands11454,2126 3USA10163,7118 4Germany10149,5258 5International4648,714 6UK4337,256 7Italy4089,367
Maastricht convergence criteria Planned or actual general government deficit should not exceed 3% of GDP, Public debt should not be higher than 60% of GDP, Inflation rate should not exceed by more than 1.5 percentage points the average inflation of the three best EU performers, The long-term interest rate should not exceed by more than 2 percentage points the average interest rate in the three best EU performers, Participation for a minimum period of two years in the ERM II. Over this period the exchange rate of the domestic currency against the euro should be maintained within fluctuation bands not wider than +/-15% around a central parity.
Declared deadlines ERM IIEURO ZONE CyprusSince 2 May 2005As soon as possible Czech Rep.No declaration2009-2010 EstoniaSince 28 June 2004As soon as possible LithuaniaSince 28 June 20042007 LatviaSince 2 May 20052008 MaltaSince 2 May 2005As soon as possible PolandNo declaration SlovakiaNo later than 1st half of 20062009 SloveniaSince 28 June 20042007 HungaryNo declaration2010
Real perspective of euro adoption in Poland The years 2012 or 2013 seem to be most realistic for Poland’s participation in the euro zone, The most difficult criterion to be fulfilled is the level of general government deficit, Poland’s priority should be fulfilment of Maastricht convergence criteria because these are a basis for a sound macroeconomic growth.