Populist politics, public anxiety over immigration and governments bristling over the experiment with integration called the European Union are driving social currents across Europe. All of those forces are active in Poland, but the central…
Populist politics, public anxiety over immigration and governments bristling over the experiment with integration called the European Union are driving social currents across Europe.
All of those forces are active in Poland, but the central European country is now also the source of some good news. The country that experienced economic growth even during the recent global financial crisis has now been elevated to the group of developed economies in the Russell Index, run by the Financial Times and Stock Exchange, or FTSE.
Poland becomes the first country from the former Soviet bloc to be graded as a developed economy by FTSE, a London-based provider of economic and financial data. The country has showed it’s creditworthy, and its citizens earn enough to qualify for the FTSE designation.
“As of September 2018, Poland will leave the FTSE Emerging All Cap Index (where its weight, as of March 2018, was 1.33 percent) and join the FTSE Developed All Cap Index, where its index weight is projected to be 0.154 percent,” write the authors of the FTSE report. “Reclassification as a Developed market is the fruit of continuous improvements in Poland’s capital markets infrastructure, supported by the country’s steady economic progress.”
Poland is the eighth-largest economy in the European Union and the largest in central Europe, and the FTSE designation is one the country’s leaders have chased for years because of its status. But government officials have often been criticized for not making enough progress in developing its capital markets and its market economy. In 2004, when the FTSE country classification was first introduced, Poland failed in four of the 21 criteria. Back then it did not have free and well-developed foreign exchange and derivative markets, stock lending was not permitted , and the country was dealing with problems related to the rights of intermediaries in international investment.
Now, according to the FTSE, Poland’s formal stock market regulatory authorities actively engage in monitoring activities, minority shareholders benefit from fair and non-prejudicial treatment, and foreign investors are generally welcomed in the country. At the same time, Poland now has well-developed equity and foreign exchange markets, a landscape that makes it easy for foreign investors to pour capital in the country.
Following the collapse of communism, Polish leaders moved quickly to establish a free-market economy, one that has matured over the years. Today, the country’s economy possesses enough competition, efficiency and transparency to be considered developed, the authors of the FTSE report said.
These are all good signs, say experts, as Polish leaders seem to understand the need to work closely with the European Union to develop a maturing economy.
“This elevation in status reflects Poland’s determination to push through economic reforms and win benefits from its membership in the EU’s single market,” says Daniel Hamilton, professor at Johns Hopkins University School of Advanced International Studies and an expert in U.S. foreign policy.
In recent years, growing nationalist politics in Poland have fueled a testy sparring match between the country’s leaders and the European Union. The new economic designation places responsibilities on the country’s leaders that will be seen to investors as guarantees, Hamilton says.
“Gaining developed market status commits Poland to maintain fiscal and monetary discipline and assurances about the rule of law.”
The elevation of Poland is the first time in nearly a decade that a country has been promoted from an “advanced emerging” economy to a “developed” one in the FTSE ranking. The ranking considers various criteria, including the quality of a country’s market, consistency and predictability, stability, market access, and the cost of implementing economic changes.
Other countries added on the FTSE watch list this year are Argentina, Vietnam and Romania, considered to be added on the list of secondary emerging nations.