Central and Eastern Europe has regained its strength and can take its rightful place back at the heart of the European economy, according to Professor Witold Orlowski, chief economic advisor at PwC.
Speaking at PropertyEU’s CEE Summit, which was held in Warsaw recently, he said: ‘We are going back to normality after the sharp deterioration under Communism and then the upheaval of the financial crisis,’ he said. ‘Eighty years ago this region was an integral part of the European economy, now it is regaining its rightful position.’
In 1990 per capita GDP in Poland was equivalent to a third of Germany’s, while in 2015 it was up to half. ‘We are well on the way to getting richer,’ Orlowski said. ‘Our growth is double that of the Eurozone, it is part of the catching-up process.’
The links are extremely close, to the point that Poland’s economy depends for its strength on the strength of the Eurozone economy. ‘In this country we tend to overestimate the impact of our policies or the importance of our ministers,’ said Orlowski. ‘The truth is that 80% of what happens in Poland from a macroeconomic point of view depends on what happens in Germany and the Eurozone, and the same applies to the other CEE countries.’
Big internal market
Poland stands out in the region because it has a big internal market, which is why it was the only country in Europe to avoid a recession after the last financial crisis, he said. But all CEE countries share positive characteristics which are attractive to investors, such as cost competitiveness and an educated workforce.
‘We are now on a less spectacular but more sustainable growth path,’ Orlowski said. ‘Growth is slower but there is no increase in debt, inflation is around zero and wage growth and the current account deficit are under control.’
The next stage for the region is to move away from an emerging market economy based on exports and cheap labour to ‘growth based on innovation and domestic capital,’ he said. ‘In any case, whatever the political developments may be, I believe macroeconomic stability and financial stability are assured, and the prospects for real estate positive.’
