Among the countries of the so-called “New Europe” – those that were once part of the Eastern Bloc, underwent transition, and are now members of the European Union – several showed early promise. Estonia, in particular, seemed poised in the mid-2010s to be the first to catch up with the wealthier, western part of the EU. But then the COVID-19 pandemic hit in 2020, bringing lockdowns and border closures. These developments heavily impacted all the Baltic countries, which have yet to fully recover from the 2020 downturn. The Czech Republic faced a similar setback.
In the end, Poland emerged as the country that achieved the highest economic growth in Europe over the past 20 years. When it joined the EU in 2004, Poland’s GDP per capita (adjusted for purchasing power) was at 48% of the EU average; now, it stands at 82%. In this regard, Poles have already surpassed some “Old Europe” countries, such as Greece and Portugal, and plan to overtake Spain and Italy by the end of the decade. Twenty-five years ago, unemployment in Poland stood at 15%; today, it is below 3%.
The Polish economy has proven remarkably resilient in the face of crises. It emerged from the 2020 COVID-19 crisis quickly and with minimal damage (unlike the Czech Republic and the Baltic states), and the war in Ukraine and subsequent energy crisis barely touched it. In fact, one could argue that the war in Ukraine has even benefited Poland due to the influx of refugees.
During the first 15 years of EU membership, around 2.5 million Poles – mostly young people – emigrated in search of better-paid jobs in Germany, the UK, and Ireland, much like Croats. But since 2018, that trend has reversed. Many of these emigrants decided to return home as living standards improved and opportunities expanded. Since then, Poland has had a positive migration balance. Part of that is also due to the war in Ukraine; since 2022, millions of Ukrainian refugees have relocated to Poland. However, many of them are children or elderly and are not part of the labor force, so Poland is increasingly in need of importing workers.
Despite these challenges, the European Commission predicts that Poland will experience even higher economic growth in 2025 than in the previous year – over 4%. Poles are highly optimistic about their country’s economic trajectory and believe they will soon be considered part of the developed world.
So, what’s their secret? Simply put – Poles don’t like socialism. Their strongest left-wing party has consistently polled below 10% for the past 20 years. Power alternates between a staunchly conservative right and a liberal center-right coalition. Their policies have fostered a business-friendly environment, which is essential for the development of any society. Croatia also had moments of promise and could have been where Poland is now (in fact, until 2010, Croatia was ahead of Poland), but Poles surpassed them – and now seem unreachable – largely because Croats have continually demanded socialist and anti-market policies from their government.
As a result, Poland has been able to develop its IT sector, agriculture, and industrial production to impressive levels, despite record defense spending. Foreign economists attribute this success to several factors: after joining the EU, Poland became one of Germany’s main trade and industrial partners; it offered low labor costs (despite often having a well-educated and highly skilled workforce); and it attracted significant foreign investment.
Still, Poland faces challenges. As living standards rise, so do wages, gradually eroding one of Poland’s competitive advantages. The need for foreign workers is increasing, and Ukrainian labor is no longer enough. This issue will certainly have to be addressed by Donald Tusk’s government in a country that is not overly enthusiastic about importing cheap labor.
If Poland successfully manages its labor shortage and avoids any major escalation of war with Putin, there is no serious reason why this “Polish economic miracle” shouldn’t grow even larger over the next 10 years, putting this Eastern European country on par with the economies of the West.
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