Poland COVID-19
While the impact of the first wave of COVID-19 infections in spring 2020 was small in Poland, the country suffered from two large waves peaking in November 2020 and in May 2021.
productivity growth include labour shortages (due to an ageing population and the low participation of women in the workforce, itself hindered by insufficient childcare), the complex business environment and the slow uptake of digital technologies among SMEs.
The fiscal policy response in 2020 totalled 5.3 per cent of GDP and included numerous measures, from wage subsidies and boosted unemployment benefits to emergency healthcare spending and transfers to local governments. On top of this, the government set up credit guarantees and micro-loans for entrepreneurs and the national development agency funded additional liquidity programmes for businesses.61
Recent investment, partly funded by EU transfers, has also helped to raise productivity, for instance by improving the road network and other infrastructure. But more needs to be done to modernise infrastructure: maintenance of existing roads should be improved, along with local public transport and railways, and the existing vehicle fleet should be renewed to curb high air pollution in urban areas.
The economic impact of the crisis has been smaller in Poland than in other EU countries: GDP dropped by 2.7 per cent in 2020, but the OECD projects that GDP will recover by 3.7 per cent in 2021, attaining its pre-pandemic level by the end of the year.62 However, the pandemic could increase the already high level of inequality.63 Temporary workers and small firms have been hit harder by the crisis, and losses in employment have been higher in poorer regions.64
Greenhouse gas emissions
Long-term economic performance
Poland’s economy has grown steadily in the past twenty years: 2020 was the first year since 1991 where yearon-year real GDP declined. However, large inequalities between regions persist: GDP per capita in Warsaw is almost 300 per cent of the national average, whereas in the poorest region, Przemyśl, this figure is 53 per cent.65 The structure of the economy has evolved since Poland shifted from a centrally planned to a market economy after 1991. Productivity increased, mostly thanks to a burgeoning service sector and the internationalisation of manufacturing.66 However, manufacturing is largely focused on low value-added goods. Barriers to
61: International Monetary Fund, ‘Policy responses to COVID-19’, website last updated on July 2nd 2021. 62: OECD, ‘Economic Outlook’, May 2021. 63: Pawel Bukowski and Filip Novokmet, ‘Within a single generation, Poland has gone from one of the most egalitarian countries in Europe to one of the most unequal’, LSE EUROPP blog, December 2nd 2019. 64: OECD, ‘Economic survey of Poland’, December 2020. 65: Polish recovery plan, ‘Krajowy Plan Odbudowy i Zwiększania Odporności’.
Poland’s greenhouse gas emissions fell by 13 per cent between 1990 and 2018. Even so, in 2018 Poland’s emissions from sectors excluded from the EU ETS were higher than their annual allocation. These include transport and buildings, and are governed by the EU’s effort-sharing regulation, which sets member-states’ emissions targets, but leaves them in control of how emissions are curbed.67 Specifically, transport emissions have more than tripled since 1990 (see Chart 13).68 Poland draws 90 per cent of its total energy supply from fossil fuels. Coal is the most-used energy source: it makes up 44 per cent of all fossil fuels used in Poland and threequarters of all energy generation in Poland.69 The country wants to reverse this trend: the recently approved ‘Energy Policy of Poland to 2040’ sets the target of a maximum of 56 per cent of electricity generation from coal for in 2030. To address high air pollution levels, Poland also aims to provide all households with district heating and lowemission energy by 2040 – a major overhaul, because residential heat is currently responsible for more than half of the country’s coal consumption.
66: OECD, ‘Economic survey of Poland’, December 2020. 67: EEA, ‘Trends and projections in Europe 2020. Tracking progress towards Europe’s climate and energy targets report 2020’, 2020. 68: IEA data, ‘Total final consumption by sector, Poland 1990-2018’, Poland key energy statistics 2018. 69: IEA data, ‘Total energy supply by source, Poland 1990-2018’, Poland key energy statistics 2018.
WHY THE EU’S RECOVERY FUND SHOULD BE PERMANENT November 2021
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