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The economy of Poland has done very well in the last couple of decades, especially in comparison to other countries of eastern Europe that escaped from Soviet political and economic control back in the 1990s. The IMF does semi-regular reviews of national economies in what are called “Article IV” report. Here are some insights from the IMF on Poland’s economy (Republic of Poland — 2024 Arcticle IV Consultation, January 2025).

Poland has achieved substantial economic convergence within the EU. The economy has roughly doubled in size over the last two decades. Real GDP per capita over the same period has increased from just under 50 percent of the EU27 average to 80 percent. Growth has been among the fastest historically for an economy of its income level and size, now the 20th largest in the world in real terms. Social indicators have also improved markedly with strong education outcomes and declining poverty rates. Moreover, income inequality in Poland is among the lowest in the OECD.

One issue for countries like Poland is the dreaded “middle-income trap,” where an economy goes through a pattern of productivity growth and corresponding structural change for a time, but then its rapid growth levels off. However, Poland seems to be proceeding along the path of South Korea, a country which has suffered less from the middle-income trap than many others.

The horizontal axis on the figure measures from the date in which a national economy reached a per capita GDP of $25,000. As you can seem, Korea (blue dashed line) kept growing strongly and Poland (red solid line) has done the same, while countries like Spain and Hungary have seen their growth rates drop off. You should get used to thinking of Poland’s growth experience as similar to that of Korea.

While Poland’s economy has grown, its rates of poverty have fallen (not especially surprising) and also its rates of inequality (somewhat surprising). While greater economic growth and greater inequality do sometimes go together, the connection between the two is heavily shaped by political decisions.

There are now predictions that next year, per capita GDP in Poland will surpass that of Japan. So along with thinking of Poland’s growth experience as similar to that of Korea, you need to get used to thinking of the average standard of living in Poland as similar to that of Japan.

One reservation about these comparisons is worth noting. To compare GDP between countries that use different currencies, one has to choose an exchange rate. There are basically two choices here: a market exchange rate, which will then fluctuate with the sometimes volatile global exchange rate markets, or an exchange rate that is calculated based on the buying power of a currency as measured in internationally tradeable goods. This second approach is called a “purchasing power parity” exchange rate, which is calculated by a research group at the World Bank. (For an overview of their most recent report, see here.)

The choice between market exchange rates and PPP exchange rates can make a big difference in international comparisons. For example, if one compares the GDP of the United States and China using market exchange rates, the US GDP is about 50% bigger than China. But if you do the same comparison using PPP exchange rates, then China’s economy is about 25% larger than the US.

In general, the PPP exchange rate takes into effect the fact that many goods and services are considerably cheaper in lower-income countries. Thus, the buying power of currencies within that country is larger. A rule-of-thumb is that when comparing average standard of living between countries, per capita GDP converted at the PPP exchange rate makes sense. But when looking at global economic clout, the market exchange rate remains highly relevant.

Getting back to Poland, no country has a guarantee of future economic success, and the IMF report discusses a number of potential bumps for Poland in the economic road ahead. But it’s worth noting that back in the 1990s, when countries across eastern Europe were coming out from under Soviet control, Poland was known as a country that followed a disruptive “shock therapy” approach to its economic transition to a market-oriented economy, as opposed to other countries that sought to follow a more staged and nuanced step-by-step approach. For Poland, the embrace of market economics has paid off.

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