With the obvious exception of Ukraine, no country has more to lose from Russian President Vladimir Putin’s warmongering than Poland, which shares a border of more than 483km with its battle-weary neighbor to the southeast. The boundary with Russian puppet-state Belarus stretches for an additional 400km or so. The implication being that if Ukraine falls, Poland might be next.
And yet, something remarkable has happened in this nation of 38 million, whose descendants go back more than 1,000 years, predating Moscow like much-older Kyiv. Poland has become no less than a juggernaut among 26 nations in the EU, with the fastest-growing economy, the strongest emerging-market currency and the most appreciated bonds sold by 50 countries since Russia invaded Ukraine three years ago.
While Russia’s economy teeters, with military spending that crowds out civilian industries, Poland, for the first time since it joined the EU in 2004, is the continent’s growth leader as its US$915 billion in GDP is projected to expand 3.3 percent next year and 3.2 percent in 2027, according to economist forecasts compiled by Bloomberg. EU GDP will show gains of 1.4 percent and 1.7 percent respectively. Russia lags behind at 1.4 percent and 1.5 percent.
Poland’s ascendance is a validation of the single market’s free movement of goods, capital, services and people between member states. The country’s resilience after several partitions and occupations also is a data-driven rebuke to anti-EU groups that paved the way for Brexit in 2016, when the UK voted to leave the EU, and even the demonization by the administration of US President Donald Trump of undocumented immigrants in the US and tariffs ruled illegal by the US Court of International Trade and a federal appeals court. For much of the new century, the so-called Polish plumber, a symbol of the perceived threat of cheap labor from central and eastern Europe, pervaded British and European media despite such workers buoying those economies.
Putin could not have been more pleased by Brexit, which reduced the UK to a shadow of its former weight in Europe’s economy. Poland is the biggest beneficiary with its GDP expanding for eight consecutive years since 2016 and poised to keep growing for at least another three years. Such prosperity is unprecedented for Poland in Bloomberg data going back to 1986. Poland’s economy has expanded 93 percent since 2017, beating the UK’s growth by 58 percentage points, according to data compiled by Bloomberg.
If the Brexit referendum marks the turning point when the UK transitioned to a European laggard from a leader, it coincides with a reverse brain-drain in terms of the total number of Poles living abroad, which declined to 1.5 million by 2023 from a peak of 2.54 million in 2017, and as Polish-born residents in the UK fell about one-third from more than 1 million, according to data compiled by Poland’s Central and Eastern European Migration Review and the Carnegie Endowment.
So even as Poland experienced one of the largest population declines in the EU since 2019, characterized by an aging population and fewer women of reproductive age, returning Poles disillusioned by Brexit are much wealthier than when they took jobs abroad a decade ago as unskilled laborers. Those coming back included professionals in education, food production, healthcare and transportation.
No European economy comes close to replicating Poland’s 125 percent increase in household consumption since the British voted to leave the EU in 2016. Poland more than tripled the eurozone household consumption gain of 40 percent and dominates major economies with its rising prosperity, according to data compiled by Bloomberg.
Poland during the past 15 years narrowed the historic gap with European peers as GDP per capita increased about 50 percent when the same measure for the UK was little changed. The trend accelerated after Russia invaded Ukraine, with Polish GDP growth climbing to No. 2 this year from No. 16 in 2023, according to data compiled by Bloomberg.
Poland’s economic renaissance has not gone unnoticed by investors. The zloty is the best-performing currency among the 23 most-traded in emerging markets, appreciating 14 percent against the US dollar since Russia invaded Ukraine on Feb. 24, 2022, according to data compiled by Bloomberg.
In the bond market, Polish government securities returned 31 percent when combining income plus appreciation, the most of 30 European governments, according to the Bloomberg Pan-European Aggregate Treasury Index. The index itself dropped 11 percent for the period, when the UK, Germany and France lost 22, 11 and 12 percent respectively. Poland, among 50 countries selling fixed-income securities the past three years, returned 24 percent, outperforming the benchmark, which fell 6 percent, as the No. 1 borrower.
Poland’s stock market, tracked by Bloomberg’s large and mid-cap price return index, is up 49 percent this year in dollar terms, making it No. 6 among the indices for 46 major countries. More than 40 percent of the Polish market is represented by 35 financial companies, which lead all industries with a return of 73 percent.
All of which shows why Ukraine can take some comfort knowing that Poland, its steadfast ally, is becoming the economic pillar of Europe.
Matthew A. Winkler, editor in chief emeritus of Bloomberg News, writes about markets. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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