Since 1989, Poland has made significant strides on its economic development journey, consistently growing except for the pandemic-affected year of 2020. While the nation has closed many gaps with Western Europe, Germany—Poland’s wealthiest neighbor and largest trade and investment partner—remains a key benchmark for comparison. The Warsaw Enterprise Institute’s annual “Opening Balance” report sheds light on Poland’s progress and challenges in its quest for economic convergence. This year’s report introduces the Catching Up Index, a multidimensional measure of development created by Professor Krzysztof Piech of Lazarski University. The index evaluates Poland’s development dynamics across 13 components divided into four subcategories, offering a comprehensive view of the country’s progress. Key Findings • Economic Convergence: Poland is projected to match Germany’s GDP per capita (PPP) by 2036 and the EU average by 2034. Poland is expected to surpass Japan as early as 2027, five years earlier than previous forecasts. • Catching Up, But Behind Peers: While Poland’s pace of catching up is commendable, it remains slower than neighboring countries like Lithuania (50.5 points) and the Czech Republic (51.7 points). Poland’s Catch-Up Index score of 45.1 places it above many transitioning nations but below the EU average. • Room for Acceleration: Implementing the report’s recommendations could see Poland matching Germany’s GDP per capita by 2034, two years earlier than currently predicted. • Economic Growth Perception: The notion of an “economic miracle in Poland” is overstated. In 2023, 166 countries outpaced Poland in GDP growth, compared to 63 countries the previous year. • Life Satisfaction Leadership: Poland has surpassed Germany in life satisfaction and healthy life expectancy, with Poles enjoying 62.4 years of healthy life on average compared to Germany’s 61.1 years. Challenges Highlighted 1. Lagging Investment: Poland ranks second to last in Europe for its investment rate, at 17.7% of GDP compared to the EU average of 22.1%. 2. Low Savings Rates: With a savings rate of just 3.3% in 2023, Poland is ahead only of Greece. 3. Innovation Deficit: Poland’s innovation index rose from 0.30 in 2016 to 0.36 in 2023, but it still lags the EU average of 0.55. Spending on R&D (BERD) increased to 0.96% of GDP in 2022 but remains well below the EU average of 1.52%. 4. Underinvested Labor: Technical armament per worker, reflecting investment in fixed assets, was 11,486 PPS in 2023, placing Poland among the EU’s bottom three. 5. Labor Costs: Polish labor remains comparatively cheap at €10.5 per hour, well below the Czech Republic (€17.0) and Slovakia (€16.0). Despite challenges, the report underscores Poland’s potential to accelerate its economic growth with strategic investments and policy adjustments. Strengthening innovation, boosting savings, and increasing investment are pivotal for closing the gap with Western Europe and achieving greater economic and social prosperity. Source: Warsaw Enterprise Institute (WEI)