Labour market reforms and investments to increase productivity could raise potential economic growth in Poland to 4% a year between 2022 and 2030, the World Bank has said in a report.
This year and next the economy may slow down due to inflation and other factors.
The report noted that the Polish economy had “quickly rebounded and grew by 5.9% in 2021” after the recession caused by the coronavirus pandemic.
“However, the development of the Polish economy may slow down this year and in 2023 due to inflation, driven, among other things, by rising energy and commodity prices, uncertainty due to the war in Ukraine and a slowdown in Poland’s main trading partners in Western Europe,” the report stated.
According to World Bank economists, Poland’s potential economic growth – a measure of the medium-term growth prospects of the Polish economy – fell from 3.7% in 2002-2007 to 3.3% in 2010-2019.
“Implementing reforms that would stop the shrinking of the workforce and reforms that improve the quality of human capital and foster green and digital transformation could help reverse this downward trend and raise the potential growth of the Polish economy in 2022-2030 to 4%,” it said.
According to the World Bank’s EU Director, Gallina A. Vincelette, two short-term economic shocks pose a risk that the economic rebound in EU countries, including Poland, could grind to a halt.
“The pandemic has drained countries’ budgets, and the war in Ukraine means that governments have to combat high inflation, slow growth and rising living costs, which particularly affect the weakest,” Vincelette said in a statement on July 18. She added that “stronger institutions, public policies supporting the implementation of difficult reforms towards building sustainable, green and resilient development are what we need.”
The authors of the report pointed to possible reforms that would help Poland increase the labour force participation rate.
“Although the rate of employment growth compared to 2019 in Poland is one of the highest in the EU, the retirement age of 65 years for men and 60 years for women is a big challenge in the context of demographic trends,” the report stated.
The report also noted that “policies aimed at increasing digital accessibility could accelerate digital transformation and thus support productivity growth in the Polish economy.”
“Currently, Poland has one of the worst results in the EU’s Digital Economy and Society Index, and spending on research and development is one of the lowest in the region,” it said.
World Bank experts pointed out that Poland was the second economy in the EU that was “strongly dependent on greenhouse gas emissions. A significant effort is needed to accelerate the green transition and reduce emissions, while supporting energy security”.
According to the WB’s expectations, climate change-related investments, which are expected to account for 37% of the National Recovery Plan (KPO), will reduce emissions by a quarter compared to the path before the announcement of the EU’s NextGenerationEU recovery plan.
“The reforms contained in the KPO may further increase the productivity and growth potential of the Polish economy,” it concluded. (The First News/Business World Magazine)
