Will Poland Be the World's 20th Economy? Expert: The Dollar Exchange Rate Is the Decisive Factor

If the złoty strengthens against the dollar more than the Swiss franc, we will be the 20th economy in the world - said Dr. Piotr Maszczyk from the Warsaw School of Economics. He pointed out that demographics and the innovativeness of the Polish economy will also be important factors.

Prime Minister Donald Tusk estimated on Monday that the Polish economy will be 20th in the world in 2025, overtaking Switzerland. He emphasized that the purchasing power of Poles is higher than that of Japanese people.

Dr Piotr Maszczyk from the Warsaw School of Economics noted in an interview with PAP that the comparison cited by the head of the Polish government comes from the forecasts of the International Monetary Fund, which is based on the dollar exchange rate.

"This means that whether Poland will actually be the 20th economy in the world or not depends on how the dollar exchange rate develops. If the złoty strengthens against the dollar, and strengthens more than the Swiss franc, then we will be the 20th economy in the world," the expert explained.

"So there is actually quite a high probability that this will happen , but there is no certainty here. Everything will depend on the pace of economic growth in Poland and Switzerland - and on the exchange rate of the two pairs, the Swiss franc - the dollar and the zloty - the dollar," he added.

The expert pointed out that in order to indicate a factor thanks to which Poland could become the 20th economy in the world, one should look at long-term trends . He pointed out that Poland's joining the group of the twenty largest economies is a factor, among others, joining the European Union. "The pace of economic growth in Poland was fantastic after 2004. It was a process that allowed Poland to make up, among others, 30 percentage points, if we look at GDP per capita, according to purchasing power parity, in relation to the so-called Old Union (EU member states that joined it before the enlargement in 2004 - PAP). And this is an absolutely fantastic result" - assessed Maszczyk.

He added that the fact that Poland is the 20th economy in the world is a direct result of Poland's size. "To make the example even more explicit, Luxembourg, for example, will never have a chance to do this, although it is an extremely rich country in terms of GDP per capita, but it is too small a country to have the largest economy," he emphasized.

"Therefore, although in terms of GDP per capita we are still poorer than the Czech Republic, than Slovenia, in global terms, if we look at the entire economy, Poland is at the forefront of the group of countries from the post-socialist bloc simply because we are the largest in terms of the number of inhabitants - thanks to this, Poland enters the top twenty," the economist pointed out.

According to the expert, the biggest problem currently facing the Polish economy is demography. Maszczyk noted that demographic forecasts by 2060 indicate that, depending on how negative the scenario is, the number of people in Poland may shrink to around 32 million or below 30 million. "The question now is: what are we going to do about it? For now, we are only moderately successful in influencing the birth rate, and that is a euphemism , not to say that we are not successful at all. Therefore, the alternative to this is a sensible migration policy, which Poland does not have," he pointed out.

"Such a migration policy should not be based on letting people into Poland who will only use our social security system, because that is not the point. We should start a serious conversation about who should come to Poland, what geographical directions are preferred and what specialties we should attract. This discussion in Poland is 10-15 years too late," he added.

The economist stressed that if Poland does not cope with the demographic problem, "we may drop out of the G20 group" . "Not because we would somehow suddenly slow down the pace of economic growth, but because others will expand their economies faster," he added.

He indicated that another factor that will determine how the Polish economy will develop will be its innovativeness. "The Polish economy currently occupies intermediate stages in the value creation chain - it should move simultaneously towards the initial stages and towards the final stages. This means that we should spend a lot on research and development, on creating innovative new products, and on the other hand we should move towards these final stages of the value creation chain," he assessed.

"There is no long-term thinking in Poland, and unfortunately, when I diagnose the situation of the Polish economy, it fills me with pessimism. While I feel proud of the fantastic work that all of us in Poland have done, the path the Polish economy has taken over the last 35 years, especially since joining the European Union, I am concerned about what will happen in the long term," the expert concluded. (PAP)

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