Danuta Huebner w Parlamencie Europejskim

Jesteś tu: aktualności » Przemówienie Profesor Danuty Hübner inaugurujące konferencję "Promocja Sukcesu Polskiej Gospodarki", 25 maja 2010

Przemówienie Profesor Danuty Hübner inaugurujące konferencję "Promocja Sukcesu Polskiej Gospodarki", 25 maja 2010

Amsterdam, Holandia

Professor Danuta Hübner
Chair of the European Parliament's Committee on Regional Development
"The Polish economy: background and prospects"
ING Poland Day
The Hague (Netherlands), 25 May 2010

We are here to look at Poland; its present and its future. And as we meet at a time of crisis, I would start with some comments on the European and global context. There is little doubt about the seriousness of the current crisis and we see today that the cost of use of unprecedented policy methods is very high. We did not anticipate nor did we prevent the crisis. Our punishment should be to at least to learn from it as it is. The task of regulators and policy makers is to undertake actions that would allow to restore equilibrium shattered by market failure but also to correct failed government policies. This is being done but it is still to be seen how fast and through what policy measures EU member states will return to their paths of growth.

More regulation is not a guarantee for avoiding the risk of recurrent crises. It can even lead to less transparent markets and a more crisis-prone environment. As we have chosen the path of more regulation, it should go hand in hand with increased simplicity and reduced complexity of financial markets, allowing them to resume their funding service to the economy, as soon as possible.

What is clear today is that fiscal and monetary policies are not substitutes for structural reforms. Structural reforms have to address underlying weaknesses of the European economy, sharply growing debts and deficits, ageing, highly probable new surge of inflation, risks to industries generated by climate change policies, especially due to uncertainty about new targets and standards, low productivity and lack of competitiveness. With less public money more will have to be done. Hence, the efficiency of using public money, both European and national, will have to be higher. Across Europe we will need a business-friendly regulatory environment, efficient government, non-distortionary taxes, high labour participation rates, especially among women, good education system, research and innovation - all that constitutes a minimum core package of measures to bring growth, jobs and competitiveness.

Without doubt, the European winning strategy has to be based on fiscal tightening, but its focus should be innovation - the only way to boost productivity and growth in a sustainable way.
A couple of months ago, the European Commission presented a new vision for Europe - the EU2020 strategy. The proposed directions do not offer a brand new perspective. Actually, we had made first steps along this path before the crisis hit. But without doubt the crisis has made all challenges much harder to cope with. And the most important issue – largely absent in the strategy – is how to make Europe go ahead towards 2020 objectives with a success.
Even if we might be technically emerging from the recession, what will be the global and the European new normal is a big unknown and the level of uncertainty high. The world and Europe are dramatically different from ten or even five years ago. Emerging economies grow and restructure with a speed that cannot be compared to any European or American industrial revolution. They already play a rapidly growing role in the global context and they are increasingly assertive.

Industries and enterprises that had been leading or doing well before the crisis hit, are often in trouble nowadays. It is reasonable to expect that new jobs, if created, will be created in new sectors. There are new expectations of consumers. There are new markets emerging. Society is aging with all the consequences for public finance, labour market policy, migration policy and new demands. Moving toward low carbon economy implies huge structural transformation. All these changes have dramatic impacts on our society. But in all these changes there is both a challenge and an opportunity.
Europe needs a long-term strategy not only to respond to global change or to, indeed, lead the global change. But this is only half of the story. We need a long-term vision and a common progress of action also to cope with our own intra-EU problems and opportunities and to better organise ourselves for those common goals. We need a strategy to better link crisis exit policies - monetary, fiscal, structural - with goals of long term growth and structural change. Which way Europe will go, will also prove key for Poland.

The new European strategy must link the crisis exit policies – monetary, fiscal, structural - and long-term growth and structural change. It must take into account the diversity of European territory which can allow us to better exploit diverse opportunities, comparative advantages and different potentials. The new strategy for Europe must be based on an active role of European citizen and an involved society. It must not exclude anybody from the pursuit of common European objectives. Multilevel governance and partnership, so well known from European regional policy experience, should be, therefore, the core of governance and delivery of the strategy.

If the ownership of the strategy is restricted to national governments and European institutions, it will simply not be delivered. Regional and local levels of European governance are important co-owners, capable to harness policy tools they have at their disposal as well as the enthusiasm of all partners: business, academia, civil society. And they have the capacity to translate European general strategic goals into their own territorial specificities.
Today there are many policy tools at local and regional levels of governance and there is also the capacity there to translate European general strategic goals into territorial specificities. Both innovation, that can bring productivity gains, and greening, that can create new demands and markets, require regional and local focus. They require place-based integrated approach to investment and growth policies. A region, a city, a town, a rural area happens usually to be such a place where all partners can be brought together and all elements needed to find a solution can be found.
We all agree that today it is important to identify new engines for growth and competitiveness and focus on them urgently. And we should look at the map more frequently to remember that Europe is too small to afford leaving parts of its territory with growth deficit. We have to broaden the growth base. We need leading growth centres but their role is also to pull others forward. That is why we must also enhance economic links between those growing faster and those lagging behind. Clearly, more networking and cooperation is needed to get us out of the crisis and put our economies on long term growth track.
EU2020 is not about final results only, it is about launching a process which has its own value, which has to be well organised, in order to allow exploit synergies between different European and national policies and different levels of governance.
EU2020 can not be seen as a green field strategy. Nothing it proposes starts from scratch. There is a European reality. There is an industry, with its structure and competitiveness. There are existing problems. The strategy is about launching new elements but also about changing old patterns and structures. There are promises made to people. There is a need to strike the right balance between which jobs should be protected and which should be replaced by new ones.
The uncertainty also relates to new economic governance of the EU, and ways of reforming the financial sector. It can take some time before the financial sector resumes its task vis-a-vis the real economy at an adequate level. We are in the process of reforming financial sector and getting it back to what its duty should be. But these reforms are still in the legislative phase. We do not really know when new laws will enter into effect. What will be their impact on real growth. There will be new European laws. But new national regulation might have to follow. Then, adjustment process in financial institutions will be needed. Banks will have to be restructured, recapitalized, re-privatised. They will be repricing their products and looking anew at their market offers. How long will it take? It can take years before banking sector resumes its function at the desired level.
We have started to move towards federal solutions of European economic governance. Markets showed that they do not trust a monetary union with one currency and sixteen independent budget authorities. If we want to have similar risk on sovereign debts we need similar budgetary discipline across the euro zone. That means the need of a very strong and effective counter cyclical mechanism of responding to shocks. Reforming Maastricht towards giving more intertemporal flexibility at national level would require an unattainable sophisticated mechanism for surveillance of sovereign debts and budget policies. A better choice could be a European facility collecting means during growth periods to use them in bad times to respond to shocks. This, of course, would take us towards a certain budgetary centralisation. A lot of political will would be needed to go this way far enough. It would certainly strengthen the budgetary discipline at national level.
To give some thoughts to imbalances, very much an issue today. Imbalances both of global nature but also within EU will have to be coped with. And this is not only about the Chinese exchange rate and industrial policy. In the EU, where competitiveness is strongly differentiated, we will need micro policies fixing labour market, stimulating productivity, increasing wage and price flexibility will be needed as well. Internal market will have to be reenergized.
The global crisis reached EU member states of central and Eastern Europe through different channels. It is too early to identify the share of external factors, the imported crisis factors and the role played by the fact that the financial crisis hit rather structurally weak economies. Exports to Western part of the Union slowed down, the flow of foreign direct investment was seriously reduced, access to private capital collapsed drastically. All this translated into growth rate reduction, unemployment growth, currency depreciation, deterioration of public finance. Both consumers and businesses were affected.
It is too early to identify the share of external factors, and assess how much of the crisis has indeed been imported. What seems rather justified to say is that the financial crisis hit rather structurally weak economies.
The situation has varied across this part of Europe with the Baltic republics affected the most, countries like Romania, Bulgaria or Hungary suffering relatively strongly, and Slovakia, Slovenia, Czech Republic finding themselves in stronger position. Poland has emerged from the crisis in an exceptional way.
The real challenge now is not so much to survive the bad time but to apply exit strategies that would make the post crisis growth robust and sustainable. Fiscal and monetary policies are not substitutes for structural reforms. In many economies it is clear that to regain this type of growth requires many difficult reforms and industrial restructuring building competitive strengths of economies. In no way a strategy of muddling through can produce sustainable results. Smart policies are needed aiming forward towards competitiveness.
The new member states are clearly a differentiated group of economies, with varying degree of openness to European and global competition but all of them have operational market economies. The quality of their institutional framework may differ, the competitiveness of their economies can be differentiated depending on the productivity, labour efficiency and the environment in which their small and medium size companies function.
High growth rates prior to the crisis were in some of these economies the result of catching up and not so much of structural characteristics of their economies, in particular with regard to productivity and wage flexibility.
Now Poland. It has been twenty years since the political transformation, building market economy and profound economic restructuring started in Poland. Accession to the European Union in 2004 was a confirmation of the maturity of its economic and political system and can be seen as a clear end of the transformation.
One can say that the current crisis has been the first test of the quality of Poland’s reforms, its institutions and its capacity to run adequate policies. As the crisis affected this group in such a differentiated way, both with regard to GDP growth and labour market performance as well as the fiscal and currency situation. It is natural to look for main factors behind this diversity.
I would say that the way the current crisis has affected Poland’s economy confirms the high quality of the Polish transformation. Our recession at the beginning of the 1990s was extremely deep. It wiped away many companies and led to restructuring of many sectors. In mid-1992, Poland was the first transition economy to emerge from this particularly deep recession and then has continued up to now without a single year of a decline of GDP. Six years after Poland's accession to the EU one can say that it has been able to exploit the opportunities generated by the accession to the EU. Both the process of preparing to accession and the six years of membership have provided a strong development impulse. Dramatic reduction of unemployment, reaching 20% in 2003 and going down to slightly above 8% in 2008, happened not only due to migration to EU member states but also due to new job opportunities at home. We had growth leading to employment, which may not be the case in the future. Fast growth continued after accession, accompanied by decreasing inflation and years of continued appreciation of the Polish currency.
Not only the GDP per capita gap between Poland and EU15 has been reduced but the development potential of Poland has strengthened. Between 1998 and 2007 the share of Poland’s GDP in that of EU27 increased from 1.9% to 2.5%. However, it is also legitimate to ask whether all opportunities generated by the accession have been fully used if we take note of the slowing down of reforms in 2006-07 which constituted an important precondition for the Polish entry into the euro zone, to the loss of dynamism in reforming public finance, slowing down in finalizing privatization and in industrial restructuring in some sectors. One can speculate today that if these reforms kept their dynamism in the years before the crisis, its impact on the Polish economy could have been even less pronounced. It is also worth pointing to one of the major weaknesses of the Polish economy, which is the very low employment rate of 54%. It has negative impact on labour cost, budget constraints and potential output.
Poland maintained its positive growth rate in 2009 (1.7%) and 2010 (most likely above 2%) thanks to both consumption and investment growth. Inflation has been kept rather low, unemployment rate has increased slightly but one has to bear in mind that the structural unemployment rate in Poland will stay at a high level for quite some time due to structural characteristics of the labour force. Foreign trade declined as Poland’s main markets suffered from serious recession. Budget deficit increased, FDI declined but might reach in 2010 around 10 bln euro. According to estimates Poland has lost due to the crisis around 4% of its potential output (mid 2009), much less than on average in Europe.
Why has Poland’s economy shown such a strong resilience to the crisis? There are several factors behind this phenomenon.
First, I would point to structural characteristics of the Polish economy. During the transformation it went through much more profound restructuring than most of others transition economies, which had currency boards or were pegged to the euro. Today the economy of Poland is much more diversified, with weaker concentration on sectors that both globally and in Europe suffered particularly strongly during the crisis. It depends to a lesser extent than all other European economies on foreign energy supplies, it is also relatively less open in terms of its dependence on exports. It has also developed a strong SME sector, but as we never managed to make their life easy, they have had to develop internal resilience and dynamism to be successful.
Secondly, relatively rapid depreciation of the Polish currency in 2008 and 2009 has supported its competitiveness right at the initial stage of the crisis.
Thirdly, although the banking sector suffered a decline of profits, it is characterized by a relatively weak links with the global financial system and a rather conservative approach to innovative instruments and it did not suffer from asset transfers to parent institutions.
Fourthly, European structural and cohesion funding has been contributing to the investment process, supporting at the same time the demand. Additionally, nationally funded investment related to the European football championship 2012 has been also conducive to growth.
Fifthly, before the crisis hit Poland’s economy was in relatively good shape, with growth rate at the level of 6%, shrinking unemployment rate, low budget deficit, low inflation rate and a vibrating SME sector. This situation did not generate an immediate pressure to increase public spending. Equally, measures to protect public companies were not deployed. Also, extraordinary measures related to the labour market were rather limited. In short, the government did not reach out to a fiscal stimulus package as an anti crisis policy instrument. Lack of stimulus package allowed to avoid worsening of public finance situation.
It is too early to exclude the scenario of growing unemployment and stagnating competitiveness of the economy. The situation in Poland will certainly depend on the evolution of both European and global context. Poland certainly should continue fiscal policy minimizing the risk of debt crisis. The real challenge and need is, however, the need to invest in competitiveness of its economy. This depends on further reforms supporting business environment conducive to growth and competitiveness, reducing the energy intensity, modernization of infrastructure and its development, investing in digitalization of economy, of public services, in access to internet.
The fact that Poland has not applied a significant fiscal stimulus package either through expenditure or revenue side of the budget and that it managed to avoid an excessive depreciation of its currency and significant deterioration of its public finance situation deserves attention. Poland has not, however, exploited sufficiently strongly the other option, the need of investing heavily in stimulating the economy through a radical improvement of the business environment. There seems to be still a vast room for such improvement in Poland.
In terms of risks to the future economic development in Poland, I would point to two issues: the impacts of external situation, both in the European Union and globally and the commitment of the Polish government to fiscal consolidation and structural reforms. So-called simple growth factors have by now been exhausted, we need to activate others. Poland needs to enhance its investment attractiveness and focus on its long term competitiveness. It is characterized today by a rather moderate risk of macroeconomic instability. It has a relatively large domestic market and a strong fabric of small and medium size companies that can expand within a better competitiveness supporting environment. The challenge could be a slow down of FDI, although it is estimated they can reach 10 bln euro in 2010. What is unclear is also the evolution of labour market performance and productivity growth. Poland's relative financial stability and high credit rating offer a rather stable outlook and access to credit. Poland will most likely continue to benefit from low risk of external instability, also due to the decision to use a flexible IMF credit line of 20 bln USD.
I would underline the importance of structural reforms that are needed to further reduce public spending, public deficit and public debt in the context of joining the euro zone. Over the last years, official comments on joining the euro zone clearly point to a further delay on this path. As a result and in spite of relatively strong macroeconomic foundations, the currency has become weaker.
Entering the ERM2 would free the business from currency risk. However, entering the ERM2 would make sense only under no risk of failing to meet all fiscal criteria during the ERM2 period. Staying there makes sense and is safe only under the condition that markets develop the confidence about future euro zone entry.
Poland has been periodically updating its plans to join the euro zone for quite some time. Poland is committed to bringing the deficit down to 3% in a sustained and convincing way in the next two years. I trust that the fiscal consolidation plan will indeed be implemented rigorously and be accompanied by high GDP growth rates. It is difficult today to declare with certainty whether Poland will be ready to enter the euro zone in 2014 or 2015. The need to continue reforms allowing for further fiscal consolidation, privatizing remaining state - owned companies, simplifying tax laws and reducing red tape for business seems to be well understood by the government. What should be strengthened is effective strategy and public policy stimulating innovation, productivity and competitiveness. This is what Poland will have to do in the years to come and where I think the contribution of foreign investment is crucial. But this will be a win-win concern.

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