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German Slowdown Only a Speed Bump for Poland
German Slowdown Only a Speed Bump for Poland
27.08.2019
EPP

By Hadley Dean

Doom and gloom are headlining world economic news once again with Germany capturing the headlines last week. After German figures showed the country’s economy shrank in the second quarter, speculation of the European superpower heading towards recession picked up stream, firing speculation about its effect on other economies throughout the world, including Poland.

Poland Has Weathered this Storm Before

Germany accounts for more than 25 percent of Poland’s exports which has sent some analysts into full negative speculation about the dangers to the Polish economy. While this is certainly a prudent concern, one needs to remember that Poland has continued its growth trajectory for two decades in spite of previous global recession.

Indeed, while Germany last went into recession in 2013, Poland’s GDP grew by 1.3% that year. In 2008, Poland was the only EU country that did not enter into recession. And while Germany’s troubles are likely to cause Poland to slow, Poland is still on a path that looks quite stable compared to many of its global peers.

Germany is extremely tied to exports to the U.S. and China which are embroiled in their own nasty dispute. This could in fact be a boost to Polish exports which are automatically cheaper in Germany.

The Polish Consumer is Still Driving the Polish Economy

Poland has issued stimulus that is fueling consumer spending throughout the economy, with an expansion of its 500+ program and benefits to both youth and seniors. This is going to continue to prop up Polish GDP for the year in spite of what its large neighbor to the west is doing.

Polish debt levels are low enough that the government also still has wiggle room to turn on the taps if the country starts to truly struggle.

Even one of Germany’s leading business publications was touting Poland’s strength as the world press was reporting its country’s own lackluster numbers as reported here.

The bottom line for investors looking for safety in the globe’s stormy economic seas, is that Poland continues to be an island of opportunity.

Hadley Dean is CEO of EPP, Poland's largest owner of shopping malls.