THE POLISH SURPRISE
As the financial crisis of 2008 and 2009 unfolded, countries across Europe were hit hard. A notable exception was Poland, whose economy grew by 1.5 percent during 2009, while every other economy in the European Union contracted. In 2010 and 2011, Poland achieved a growth rate of 3.9 and 3.8 percent, respectively, which were among the best in the EU. How did Poland achieve this?
In 1989, Poland elected its first democratic government after more than four decades of Communist rule. Since then, like many other eastern European countries, Poland has embraced market-based economic policies, opened its markets to international trade and foreign investment, and privatized many state-owned businesses. In 2004, the country joined the European Union, giving it easy access to the large consumer markets of western Europe. All this helped transform Poland into a major exporter. Exports account for about 40 percent of gross domestic product (in contrast, they account for around 12 percent in the United States). As a consequence, between 1989 and 2010, Poland recorded the highest sustained growth in the region. Real GDP doubled over this period, compared to a 70 percent increase in neighbouring Slovakia and 45 percent in the Czech Republic.
Poland's government has also been fiscally conservative, keeping public debt in check, not allowing it to expand during the recession as many other countries did. This led to investor confidence in the country. Consequently, there was no large outflow of funds during the 2008–09 economic turmoil. This stands in stark contrast to what happened in the Baltic states and Greece, where investors pulled money out of those economies during 2008 and 2009, driving their currencies down, raising the cost of government debt, and precipitating a full-blown economic crisis that required the IMF and EU to step in with financial