Martyn Halsall in Warsaw
YOU are unlikely to be in Warsaw for more than an hour before hearing some anti- Russian anecdote or learning that the former Communist Party headquarters is now the central bank. But Polish self- confidence is not always reflected at international level. Reports to the European Bank for Reconstruction and Development say that problems of law, tax, crime and corruption are major disincentives to international investors in central and eastern Europe.
In Poland the changing economy has shifted the balance of risk for inward investors, according to the bi-annual risk assessment from the Gdansk Institute for Market Economics. This ranked 35 of Poland’s 180 industrial sectors as low risk, but 24 as very high risk. Sectors that were young and small, with few competing companies, were listed as having least risk. These included rope and associated products, cosmetics, and some food and dietary items. High-risk areas ranged from leather clothing and knitwear production to coal-mining.
Lot Polish Airlines is a potent symbol of the economic transition. Massive investment in American aircraft brought one of the most modern fleets in the world. Five more aircraft will be bought this year for $225- million. Lot would like its success to be seen as reflecting the national economy – hailed by optimists as achieving growth rates three times that of Britain but seen by pessimists as in danger of overheating.
Production of consumer goods rose 15% between 1995 and 1996 as Polish companies came under increasing pressure from foreign competition.
But wages remain low and Poland ranks as only the world’s 43rd most competitive country. Unemployment nudges 14% and, while inflation fell from 45% to 15% between 1992 and 1996, some 14% of the 38-million population are still classified as poor.