Germany eyes Poland’s economic miracle for post-COVID growth

Since the Law and Justice Party (PiS) got here to energy in 2015, the EU’s sixth-largest financial system has drawn consideration primarily over its alleged democratic backsliding. At the identical time, nonetheless, the resilience of the Polish financial system has been astonishing. 

The Eastern European Development Bank (EBRD) expects 3% growth in 2021, which might make Poland the one EU member to achieve its pre-crisis stage by the tip of 2021. The nation has grown from 49% to 70% of the EU’s common economic wages since becoming a member of the EU in 2004 and in November Poland was again number three in the EU in terms of industrial production growth.

Economy Minister Jaroslaw Gowin has instructed the German enterprise each day Handelsblatt just lately: “Many Polish firms have used the pandemic to reorganize themselves, digitize extra and step in the place different provide chains have been torn down.”

And EBRD Chief Economist Beata Javorcik instructed the identical newspaper that two facets would distinguish the Polish restoration from others in Europe: variety and suppleness. “Both have served the nation nicely in the course of the coronavirus pandemic,” she stated, including that in the course of the coronavirus disaster “a beneficiant assist package deal” had helped.

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Since the collapse of Communism in Eastern Europe, the Polish and German economies have change into more and more interlinked. In the city of Lodz, German family gear maker Bosch-Siemens Hausgeräte, for instance, not solely sees washing machines roll off manufacturing traces, but additionally researches new family expertise.

In the Walbrzych particular economic zone close to Wroclaw, Daimler has expanded its newly constructed engine manufacturing website with a second battery plant, which is state-of-the-art Industry 4.0 customary and CO2-neutral, fed with electrical energy from a wind farm 10 kilometers (6.21 miles) away. Volkswagen in the meantime not solely produces Caddy, Crafter and Transporter fashions, however aluminum castings additionally come from Poznan distributed throughout the worldwide VW community.

German commerce with Eastern Europe suffered within the 2020 pandemic, down 8.4% to €423 billion ($512 billion), in line with the Eastern Committee of the German Economy. However, commerce with Poland remained nearly fixed at €123 billion regardless of the disaster, whereas imports from Poland to Germany even elevated by 1%. Poland moved as much as fifth place among the many most necessary German buying and selling companions, behind China, the Netherlands, the US and France, nonetheless forward of Italy, Switzerland, the UK and Austria. Trade with Russia fell 22% to €45 billion.

“Putting it merely, there’s little which may not show helpful in relation to economic success in Poland from the German perspective and vice-versa,” says Marek Wasinski, head of the international commerce crew on the Polish Economic Institute.

“Diversity and dimension of the Polish financial system is the important thing for its resilience in the course of the disaster,” he instructed DW. “Strong ties with German financial system are additionally one other issue shaping this success.” 

Wasinski factors to environmental expertise as probably probably the most attention-grabbing for future growth in Poland. “From the transformational perspective — the change in vitality combine, enhancing vitality effectivity of the buildings or electrification of the financial system, but additionally concerning tradel — Poland is the biggest EU exporter of electric buses — it positions very nicely in European provide chains of batteries, it’s the fifth greatest exporter of ‘inexperienced’ items within the EU,” he says.

Energy is vital

Above all, the deliberate restructuring of the vitality business, away from coal and in the direction of renewable energies, may very well be a significant area of exercise for German firms. Climate and Environment Minister Michal Kurtyka has introduced just lately that Poland desires to speculate “a complete of €240 billion by 2030.”

The Polish vitality transition seems to be decisive for the nation’s medium-term economic success. Three quarters of the electrical energy generated there nonetheless comes from coal energy crops. During the COVID-19 pandemic, the Silesian districts, the place miners cut close to tight black chunks in the seams, was the most important corona hotspot within the Vistula province final summer season.

Some 61 Polish cities are on the record of probably the most polluted locations within the EU. The largest lignite energy station in Europe and quantity two on the planet in Belchatow is the most important single CO2 emitter within the EU — bigger than all of Ireland or Slovakia.

Kurtyka desires to cut back the share of coal to between 28% and 11% inside 20 years, relying on how rapidly the investments required for the vitality sector move by 2030. By 2040, wind farms alone ought to produce 8,000 to 11,000 megawatts of electrical energy. In addition to state funds, primarily coming from the EU, massive non-public investments would additionally must be made and billions must be earned on electrical energy by environmental taxes.

Poland’s vitality transition to 2040 is estimated to price 1.6 trillion zlotys (€355 billion, $430 billion). Of this, adjustments within the gasoline and vitality sector will quantity to roughly 890 billion zlotys, together with as much as 342 billion zlotys on investments in electrical energy era, in line with Polityka Insight, a number one suppose tank for political and economic analyses.

In complete, roughly 745 billion zlotys will probably be spent on transition within the industrial sectors, by households, companies, transport and agriculture, Warsaw-based Polityka Insight notes.

“Poland wants big investments in heating networks and vitality infrastructure,” Robert Tomaszewski, an vitality analyst at Polityka Insight, says. Many coal-fired heating plants are owned by small local governments and can’t afford investments in renewable vitality or much less emitting fuel, Tomaszewski instructed DW.

Private capital is required to decarbonize the district heating sector with about 100 billion zlotys to be invested over the subsequent 10 years. “This opens a window of alternative for international firms,” Tomaszewski provides, noting for instance that German energy utility e.on, which has heating belongings in Szczecin and Opole, desires to broaden in Poland. France’s Veolia, which has district heating community in Warsaw, has comparable plans.

The offshore business additionally has a really massive funding potential, says Tomaszewski as Poland desires to broaden its offshore wind farms to five.9 gigawatts of capability by 2030. As far because the fuel is worried, this type of vitality is to step by step take the place of coal within the Polish vitality combine.

In each sectors, wind and fuel, German engineering agency Siemens is looking for to play a task by a cooperation with Polenergia, one of many greatest Polish non-public vitality agency, and in delivering fuel generators for vitality initiatives within the Plock and Rybnik energy crops. 

“In the nuclear space, there may very well be a backlash from Germany Greens [party] after September [general elections in Germany], whereas the Baltic pipeline Nord Stream 2 will possible push Poland to speed up fuel diversification plans,” Tomaszewski notes.

Other key sectors 

Other sectors that one ought to control are enterprise and IT companies, the place Germany is simply the fifth-biggest investor, within the chemical business, with investments wanted in decreasing emissions, in addition to within the pahrmaceutical business, Wasinski says. 

“There can be a rising potential for cooperation in automation and digitization of the Polish financial system and particularly the manufacturing sector,” he provides.

Germany and Poland, Wasinski believes have gotten the economic middle of Eastern Europe, able to creating worth chains which are “helpful for each companions.”

The put up Germany eyes Poland’s economic miracle for post-COVID growth appeared first on Deutsche Welle.

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