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The success of the shock therapy

At the end of 1989, the Deputy Prime Minister and Minister for Finance Leszek Balcerowicz introduces an economic program aiming to organize the passage of planned system towards a liberal economy. Called "shock therapy", that consists of a radical reforms leading to the liquidation of all the central mechanisms of economic planning and to the introduction of the free market. This program of stabilization is characterized by the fight against inflation, the liberalization of the prices and the deregulation of the markets, the suppression of the majority of the monopolies, of the grants and the tax reliefs, the development of the individual initiative and privatizations, the easing of the economic legislation, the total convertibility of the zloty and the promotion of the foreign investments.

Poland: a tiger of the 1990's

This program produced quickly positive results. After a period of rectifying inflation, the increased of the prices falled from 686 % in 1990 to 43 % in 1992. Especially, Poland was the only country of the area to achieve a GDP growth since 1992. Arrived to the power in 1993, the Alliance of the left slows down the rhythm of the reforms. The country recovered its 1989 production level as soon as 1995. The economic growth accelerated in the following years and reached an average of 5 % until the end of the decade.

The Polish economy has been since confronted to a deceleration of its growth and to a strong unemployment, which reaches 20 % of the working population in mid-2005.

Main economic indicators for Poland

  2012 2013 2014 (f)
GDP growth (%) 1.9 1.6 3.1
Inflation (yearly average) (%) 3.7 0.9 1.5
Budget balance (% GDP) -3.9 -4.5 -3.5
Current account balance (% GDP) -3.7 -1.3 -1.3
Public debt (% GDP) 55.6 57.5 49.5

(f) Forecast

Source: Coface.com

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