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The Warsaw Voice » Business » July 29, 2009
A New Challenge for Poland and Europe
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Warsaw-CEE Financial and Economic Hub
July 29, 2009   
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Warsaw has all it takes to cement its position as the financial and economic hub of Central and Eastern Europe, and the facts, figures and the opinion of numerous experts testify to this. However, it is up to us whether we can take full advantage of this favorable position. Are leading politicians, business people and economists, international investors and entrepreneurs able to meet this challenge and make real the vision which just a few years ago Polish people could only dream about?

Poland is among the countries that have coped best with the global crisis. This year, Poland's neighbors face a biting recession that may see their GDP shrinking 6 or 7 percent, or even more, as is the case in Ukraine. Meanwhile, Poland's GDP is still growing. According to the World Bank, the Polish economy will grow 0.5 percent this year and 0.9 and 3.5 percent in 2010 and 2011 respectively. It is clear to the World Bank that Poland is highly likely to fend off the general recession and, consequently, become a notable example of economic success.

Analysts are aware of this and at the beginning of July, the Standard & Poor's agency maintained its "A minus" rating for Poland, while Poland's neighbors were shown a yellow card. The reason is simple: Standard & Poor's believes that Poland will be the only country in the region to avoid crisis and recession.

Compared to other European countries and even the rest of the world, Poland is an island unengulfed by the tsunami of economic woes. This should not be seen merely as a coincidence, because the healthy and conservatively-inclined Polish banking system has helped Poles resist the temptation of falling into excessive debt. At the same time, the system has managed to safeguard its own healthy foundations.

In the recent past, those in charge of the Polish economy chose not to pursue the kind of narrow specialization characteristic of many developed countries. As a result, the Polish economy is sufficiently diverse to endure the collapse of production in key industries in Europe and around the world. With around 38 million consumers and a convenient location in the center of Europe, at the intersection of the cultures and economies of the East and West, the Polish market is large and abundant enough to allow domestic demand to significantly compensate for the negative impact of recession in neighboring countries.

One should not underestimate the impact of the stance taken by the Polish government, which has consistently avoided resorting to taking out loans abroad in order to stimulate the economy. When the crisis was in its early stages, Poland was severely criticized for this approach, but now it has turned out that this policy has brought positive results. The Polish approach stems from the unfortunate experience of the 1970s, when then-communist Poland ran up a huge debt with foreign creditors. That led to a severe economic crisis in Poland and eventually to the fall of communism in Central and Eastern Europe at the end of the 1980s.

The Polish capital is home to the young and buoyant Warsaw Stock Exchange. Its managers aspire to turn the bourse into the region's financial hub. They started putting the plan into action long before the tide of the crisis swelled. Now the plan has proved its worth in difficult times.

The IPO Watch Europe report, compiled by PricewaterhouseCoopers, indicates that the Warsaw Stock Exchange was leading the way in Europe in terms of the number of new companies entering the stock exchange in the fourth quarter of 2008. As far as the whole of last year is concerned, Warsaw emerged as the second largest market in Europe in terms of the number of stock exchange debuts and the value of initial public offerings. Markets operated by the Warsaw Stock Exchange in 2008 saw the debuts of 94 companies, while the number of initial public offerings in London was 99. The value of initial public offerings in Europe exceeded 15.5 billion euros last year and while London accounted for 8.9 billion euros of that, initial public offerings in Warsaw totaled 2.5 billion euros, putting the Polish capital in second place. This year, the figures for the Warsaw Stock Exchange look just as promising and Warsaw is consolidating its position as regional leader.

How should international business leaders, the Polish government and those in charge of the economy take advantage of this watershed opportunity to transform Warsaw into the financial and economic hub of Central and Eastern Europe? How can this benefit Poland and Europe? What are the challenges and dangers inherent in this process? We will try to answer these questions during an international conference that the Warsaw Stock Exchange, the International Herald Tribune and The Warsaw Voice will hold in Warsaw Nov. 26 and 27. This meeting of investors, entrepreneurs and experts on the economy will take place at the Warsaw Stock Exchange headquarters. The host of the conference is the mayor of Warsaw, Hanna Gronkiewicz-Waltz.
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