Morning business news live from Poland - May 29Thursday 29 May 2014 12.22
This month ten years ago, Poland joined the European Union - 15 years after the fall of communism. But Poland's transformation began long before the country's first post-communist elections in 1989. 1989 was the year, in partly free elections, when the solidarity-led opposition took 99% of the seats in the Senate, and all of the 35% of seats it was allowed to go for in the powerful lower house. 18 months later Jan Bielecki headed the first Polish government in 47 years where none of its members had served under communism. His approach was to concentrate on more economic reform than political. And now, with the strongest economy of the former communist bloc countries, Poland is thinking about another change - this time to the euro. But given its strong position, and that it has control of its own currency and rates, there are concerns that the euro might not work well in Poland.
Jan Bieleski, head of the Prime Minister's Economic Council, says that interest rates simply reflect the macroeconomic position and economic adjustment of an areas. He says that Poland is increasingly converging to the euro zone's main stream economies - and Europe's powerhouse of Germany. There is increasing evidence that the ECB's rate policies are not good for Germany - or for Ireland.
Poland got where it is today for a number of reasons - among them its competitiveness and flexibility, no grave errors in policy making and a healthy banking sector. Its government debt is not bad while its currency is stable. Despite a commonly held view that they know how to spot the danger signs, Warsaw's property market is going through a boom.
Katargyna Zawodna, President of Skanska Property Poland, says the reason why Poland managed to avoid a recession during the last global slowdown was due to having a much stronger set of regulations which require more security and make sure that the price of the property matches its actual value. She says the real estate market in Poland is developing very fast with a lot of construction as well as a lot of demolition. 600,000 square metres of land is currently under development, she adds. She says the country is in the middle of changing the old office stock to new top class, modern and sustainable buildings. The reason for the fast development of the real estate market is the fact that Poland is one of the most attractive markets for business services companies who are looking for a well educated workforce, stable and transparent economy, while at the same time it can offer a similar culture to other European countries with lower labour and operational costs, she adds.
Sigfred Anderson is a senior vice president at Norway's biggest financial services company DNB Bank. He is involved in some "difficult" real estate here, and has real concerns about what is happening in market, adding that things may be moving too fast. He says there will be growth of office space in the central Warsaw area of 20-25% this year and over the next couple of years - much larger growth than that of expected demand. He says there are fears this could lead to a real estate crash, or at least it will result in a more moderate slowdown of prices and values. This could have a big effect on the Polish economy, as any crash affects an economy negatively. Downturns are manageable when they are slower but when they are quick they are more brutal and tend to have a bigger effect, the banker says.
Miroslaw Szcepanski, from the Warsaw Stock Exchange, says that the Polish stock market first traded in 1991 with just five companies in the former headquarters of the Communist party. Today almost 900 companies are listed on the exchange, including many foreign firms. However, no Irish firm is included yet, he adds. Mr Szcepanski says there are many reasons foreign companies want to list in Poland, including the fact that the economy there is growing and they expect the market to become "much more interesting". He believes the Warsaw Stock Exchange is one of the most trusted institutions in Poland due to the transparent way many companies, who had been owned by the state, were privatised.