CONFERENCE CALL: Poland's self-styled "Davos of CEE"

By bne IntelliNews September 22, 2009

Andrew de Roy in Krynica -

Forum Ekonomiczne, Poland's self-styled "Davos of Central and Eastern Europe", took place in Krynica on September 9-12. From humble beginnings 19 years ago - when 120 delegates met in one room to discuss the economic issues of post-Communist Poland - the annual September jaunt has grown to encompass more than 2,000 delegates from 65 countries, as well as being covered by over 400 journalists from all over the region.

The four-day event began for all concerned with the arduous journey to reach the quaint historical spa town, which encompasses much of what is good and bad about modern Poland. New houses and restaurants are littered along the route, which as a result of totally inadequate motorways is totally clogged. Other delegates struggle in communist-era trains that painfully slowly grind their way to Krynica from Warsaw, Krakow and Vienna.

Despite the long journey, the economic forum has grown to be regarded as one of possibly the strongest in the CEE region. The conference has 13 concurrent panels taking place throughout the day, discussing the economic, social and political issues of the day, each with English and Russian translations. The conference remains very much Poland-centric, but has a plethora of regional businessmen appearing most notably from the other Visegrad nations, Ukraine and, encouragingly, also from Belarus this year. The Russians are always invited; many invitees don't show up, but, according to one, they "are making more and more of an effort." One Hungarian energy specialist said that, "Krynica is the place in the CEE where the real energy experts come and speak."

Disappointingly for the Forum, the conference has been shunned over the past few years by Poland's inward-looking president, Lech Kaczynski, and also this year by PM Donald Tusk (allegedly, due to him being afraid of questions on last year's announcement at the World Economic Forum that Poland will join the euro in 2011). Therefore, unlike previous years, the top political elite from the region didn't attend the conference. However, the CEOs of the majority of Warsaw's blue-chip companies, along with many of the most important financiers and a smattering of politicians, were found milling in the main Krynica courtyard, enjoying the warm early autumn sunshine. The biggest foreign names at the conference included vice-president of the European Commission, Guenther Verheugen, former Spanish PM Jose Maria Aznar and US Nobel-prize winner Edmund Phelps.

Mood music

One year on from the collapse of Lehman Brothers, the mood at the conference was cautiously optimistic. The CEE region has been one of the worst hit by the crisis, with local asset bubbles pricked and currencies tumbling. Ukraine, the Baltics and Hungary were five of the worst hit countries in the world over the past year, but the mood of relative optimism comes in part from the strong performance of the Polish economy. Poland was the only country to achieve positive GDP growth in the first half of 2009 (1.1%), which made it the best performing economy in the OECD.

Indeed, numerous panellists pointed out that Poland showed government rescue programmes were not the only way to overcome the current economic crisis, and that the calm and relative inactivity of the Polish government has very much helped local enterprises deal with the slump. "When governments globally were panicking, we remained relatively passive, which undoubtedly helped us," the former CEO of the Warsaw Stock Exchange, Wiesław Rozłucki, told bne.

Participants agreed that the falls in local currencies, combined with the lower base production costs and huge inflows of EU Structural funds. have helped the economies become more competitive. "These factors resulted in a fortunate blend of conditions which have resulted in the Polish economy avoiding recession," said Michal Kurtyka, CEO of consultancy BPI Polska.

On a macro level, much uncertainty and pessimism about the direction of the global economy was voiced. The usual problems of an ageing population, inefficient and unreformed government institutions, and shoddy infrastructure were often mentioned as problems for the region to overcome to remain globally competitive. Moreover, it was pointed out that decoupling of the region from the rest of the world would never happen.

A clear sign of the times, said delegates, was the return of the European Bank for Reconstruction and Development to the "developed" CEE countries. "All talk of countries in the region graduating out of the EBRD's sphere has well and truly stopped," said a spokesperson for the EBRD, whose office in Warsaw was to be shut down when the lease expired in 2010, but won't now, and the office in Riga that was shut last year may be reopened. In 2010, the bank was looking at investing a measly $250m in Central Europe out of $6bn available to it. This figure may now be as high as $1.5bn. "Governments in many countries are begging us to get back involved in providing working capital to their economies," the spokesperson said.

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