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The Warsaw Voice » Business » November 18, 2009
Economy
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Catching Up With Rich Nations
November 18, 2009   
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Poland is beginning to catch up with the most affluent countries in Europe and worldwide, according to data by Eurostat, the European Union's statistics office.

The data show that Poland's 2008 GDP per capita was 57 percent of the EU average, ranking the country fourth from the bottom in a league table of all EU nations.

Latvia, which has been hit hard by the crisis, is just behind Poland with per-capita GDP at 56 percent of the EU average. Bulgaria and Romania, with 40 percent and 46 percent of the EU average respectively, are in last and next-to-the-last place respectively.

Luxembourg, whose per-capita GDP is more than 2.5 times higher than the EU average, tops the league table and is followed by Ireland with 140 percent, the Netherlands with 135 percent, and Austria with 123 percent.

Of the new member states which joined the EU together with Poland in 2004, the most affluent ones are Slovenia and the Czech Republic, with per-capita GDPs accounting for 90 percent and 80 percent of the EU average respectively.

Although Poland's position in the league table is not very strong, economists say, back in 2004 when the country was entering the European Union, its per-capita GDP accounted for only 50.6 percent of the EU average. This shows that people in Poland are becoming more affluent, according to experts.

The European Commission predicts that the gap between Poland and the most affluent countries will narrow further in the near future.

There is every indication that Poland will catch up with Hungary and Estonia in terms of affluence this year, according to a projection released by the European Commission in October. Poland's GDP per capita at purchasing power parity is expected to reach 14,100 euros. This will mark major progress compared with Estonia, whose economy grew rapidly until recently-by 7-10 percent annually.

In 2000, Poland was more affluent than Estonia , but in 2007 its per-capita GDP accounted for only 77.5 percent of Estonia's. It seemed then Poland would not be able to catch up with this "European tiger" for a long time. But the crisis has changed everything, economists say.

The European Commission predicts that Estonia's GDP will shrink by 13.7 percent this year; Hungary's GDP is expected to contract by 6.5 percent, while the Polish economy is projected to grow by 1.2 percent.

The gap between Poland and the most affluent nations in Europe is also narrowing. This year, Poland's per-capita GDP is expected to reach 52 percent of Germany's and 44 percent of Ireland's per-capita GDP. This will represent a major increase from 47 percent and 36 percent in 2007 respectively. If Poland managed to keep this pace in the long run it would take around 20 years to catch up with Germany and 14 years to catch up with Ireland, according to the European Commission.

Poland is only one step from joining the group of the world's most developed countries, according to the latest Human Development Report published by the United Nations in October. The UN list of countries ranked by level of human development is topped by a group of 38 developed nations with the highest human development indices (HDI)-exceeding 0.9. The highest score a country may achieve is 1 point. In the 2009 human development league table, compiled on the basis of data from 2007, Poland scored 0.88 points and was ranked 41st, ahead of 140 other countries.

Three factors are taken into account when compiling the league table: life expectancy at birth as a measure of the population's health and longevity, the level of education and literacy, and the standard of living measured by per-capita GDP at purchasing power parity.

Poland does well in the first two categories, economists say. Life expectancy for Polish women, at 79.7 years, is only three years shorter than that for Norwegian women, who top the UN league table in this respect. The difference in male life expectancy between the two countries is larger, at seven years. In terms of the level of education, Poland is close to Western European nations, which score the best in the world.

Meanwhile, Poland still lags behind the best performing countries in terms of household incomes. In 2007, the average Pole earned $15,000, over three times less than the average Norwegian and two times less than the average German. At the same time, Polish men earn one-third more than Polish women.

Western European countries, the United States, Japan, South Korea and the wealthiest Gulf states are still ahead of Poland in terms of household incomes. But according to UN experts, Poland is already more developed than Hungary and Slovakia. It has also moved ahead of all Latin American countries and Saudi Arabia, which has slightly higher household incomes thanks to oil, but falls behind Poland in terms of education and healthcare. Also, the gap between Poland and its eastern neighbors has widened since the fall of communism two decades ago. Poland is 41st on the UN list while Belarus is 68th, Russia 71st and Ukraine 85th.

Despite the overall increase in the country's affluence, disparities among individual regions have not diminished. In 2007, Poland's richest region was Mazovia, while Podkarpacie was the poorest, according to the Central Statistical Office (GUS). In Podkarpacie, per-capita GDP was only zl.20,800 a year, accounting for 42.2 percent of the level reported in Mazovia. The disparity has increased in recent years. In 2000, the per-capita GDP of Poland's poorest region accounted for 46.2 percent of the level reported in the richest region.

Disparities within individual provinces are even larger, with the most striking differences recorded in Mazovia province, where the city of Warsaw continues to develop rapidly. In 2007, Warsaw's per-capita GDP reached zl.94,200 a year, accounting for around 160 percent of the EU average. On the other hand, Mazovia province's Radom area reported a per-capita GDP of only zl.22,300, over four times less than Warsaw's.

The European Commission predicts that the gap between Poland and the most affluent countries will narrow further in the near future.
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