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Competitiveness of Polish Economy Perspectives for Euro Adoption

Competitiveness of Polish Economy Perspectives for Euro Adoption. Magdalena Zając. Entry to the EU: 2004, May 1st Total area: 313 000 km ² Population: 38,6 mln Political system: Republic Currency: Zloty. Poland in numbers.

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Competitiveness of Polish Economy Perspectives for Euro Adoption

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  1. Competitiveness of Polish EconomyPerspectives for Euro Adoption Magdalena Zając

  2. Entry to the EU: 2004, May 1st Total area: 313 000 km² Population: 38,6 mln Political system: Republic Currency: Zloty

  3. 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%

  4. GDP growth in 2004

  5. Geographical structure of Polish export in 2004

  6. Geographical structure of Polish import in 2004

  7. 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,

  8. 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.

  9. 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

  10. COMPETITIVENESS • Following the international assesment of competitiveness in 2005 Poland occupied 51st position • In the year 2004 60th position • Change in position: + 9

  11. The advantages: high economicgrowth, inflation level, costs of labour in industry, expansion of Polish products ininternational 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.

  12. Foreign Direct Investments to Poland between the years 1993-2004 (in million USD)

  13. The accumulated value of FDI in Poland between the years 1993-2004 (in million USD)

  14. Cumulative Foreign Direct Investment in Poland by country of origin in mln USD (2004)

  15. Maastricht convergence criteria • Planned or actual general government deficitshould not exceed3% of GDP, • Public debt should not be higher than 60% of GDP, • Inflation rateshould not exceed by more than 1.5 percentage points the average inflation of the three best EU performers, • The long-term interest rateshould 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.

  16. Declared deadlines

  17. 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.

  18. Thank you for your attention

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