Again on the shale gas issue.
One of the reasons Poland was able to avoid a recession whilst everyone around them contracted was that Poland had an independent currency that happened to be valued lower than both the dollar and the euro. This low-value currency makes Polish goods and services cheaper (and imports more expensive, which incentives Poles to buy Polish goods), also it makes Poland an attractive place to invest. Foreign companies are tripping over themselves to set up shop in Poland (Dell, Fiat, GM, and now energy companies.) The zloty is now being looked at as a cherished pillar of the Polish economy, and skepticism of the euro has grown (especially after seeing what happened recently to Greece. Many in Greece lamented being tethered, which was relatively strong, and not being able to de-value the currency to give a jump start to Greek exports. Also, China keeps the yuan pegged lower to the dollar for just this reason: to make Chinese exports more attractive. Right now, many countries are engaged in a 'race to the bottom' of de-valuing their currencies.)
Huge energy reserves are a mixed blessing, and it is right to fear the onset of Dutch disease. Dutch disease describes an economic condition where one commodity (usually energy or natural resources) becomes a main engine of the economy and the currency rapidly gains value against other currencies. It's called a disease because with the rise in the currency, the country no longer becomes a feasible place to manufacture goods and its agricultural exports become more expensive. Commonly-cited examples are Venezuela (oil), the US (financial services in the '80s and '90s), Russia (oil and gas), and, of course, the Netherlands (the discovery of gas). When prices are high and everything is humming alone, it's all good; once the price of gas crashes, Poland's economy goes into a tailspin and only recovers when the price of gas does (this recently happened to Russia (the price of oil and steel dropped in 2008) and Venezuela. It also happened to Ireland and Iceland with the banking crises.) This can be mitigated by proper investment into wider areas of the economy.
A huge explosion (pardon the pun) of gas exports from Poland would undoubtedly cause the zloty to rise, maybe even overtaking the euro. If that were to happen, Poland's developing manufacturing and agriculture base would come to a screeching halt. Foreign companies would move their factories to cheaper countries and Polish-manufactured goods would become quite expensive.
The zloty's rise would, however, coincide with the mandated move to the euro (if the euro still exists around then. Some think that the euro will be gone within five years, probably because Germany will pull out. NOTE: I'm not going to opine whether I think the euro will stick around. I honestly don't know.) So, the zloty's rise would be drowned out, because then Poland would enter into the euro area and the currency would depend more on the strength of the area than just that of Poland alone.
Beyond this sudden "doom and gloom" image I painted, the outlook certainly looks good. Even if the zloty rises, that means that imports, and thus variety, are cheaper (I went shopping today, so I can tell you that I was none too pleased over the choices and variety of foodstuffs. 500 types of pickles, but no tahini: this isn't fair.) The average salary in Poland, which now stands under $20K, would most certainly rise. Poland would pour even more money into infrastructure improvements. Also, it would help mitigate the problem of Poland's aging and shrinking population (another topic to which I will devote a post) by helping to prop up their pension and health programs.
Money is money, and resources are resources. But Poland will have to be careful how it handles this new-found gas. If they don't handle it just right, it might come around to bite them in the ass years down the road.
Toruń, just before turning thirty - Off to Toruń and nearby over the last weekend. The purpose of the trip was to take a break from everyone and everything, from all thoughts and tribulatio...
1 hour ago