What you need to know about the Polish economy
Poland has recently ascended into the global spotlight as it co-hosts Euro 2012, the European soccer championships. The right to host this tournament is essentially the culmination of a remarkable transformation the Polish economy ( PLND , quote ) has undergone since it embraced capitalism.
For decades, the Polish economy languished under the restrictive grip of communism. As a Soviet satellite state, Poland had little choice but to pursue economic policies that rendered the Polish economy feckless.
However, starting with Lech Walesa’s Solidarity Movement, an independent movement catalyzed, allowing Poles to begin a path towards freedom from oppressive economic policy.
Poland’s metamorphosis from struggling post-communist regime to dynamic Eastern European economy did not materialize overnight. Arguably the most important step in the rise of the Polish economy was their admittance into the European Union.
At the time, the Polish economy was heavily dependent on agriculture. By joining the European Union, Poland was able to benefit from Europe’s Common Agricultural Policy that netted the country billions in subsidies, as well as the natural benefits of a trade union for a country with a cheaper currency than most of its peers.
As a result of these favorable conditions, the Polish economy became a cheap labor destination for a number of European firms. As a result, the Polish economy has moved away from agriculture and towards industry and services, with the latter two now constituting 95% of Poland’s GDP.
Since joining the European Union, Poland’s economy has grown at a brisk pace. The government has also managed the economy admirably; in fact, Poland was able to avoid recession during the recent global financial crisis.
Investors looking for access to the Polish economy can do so through the Market Vectors Poland ETF PLND. Although largely exposed to the financial sector, Eastern Europe’s banks appear to be in much better shape than their Western European counterparts. Other heavily weighted sectors include basic materials, utilities, and energy.
While definitely exposed to the euro zone crisis, the Polish economy is well-positioned to take advantage of a rebound in growth in Europe .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.