Poland becomes the first country from the former Soviet bloc to be graded as a developed economy by FTSE, a London-based provider of 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.
Poland also meets the World Bank criteria for high gross national income per capita. According to most recent data, Poland ranked 57th in the global ranking with an average gross national income of $12,710 per capita in 2017.
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.
“Gaining developed market status commits Poland to maintain fiscal and monetary discipline and assurances about the rule of law.”
Poland now occupies the list of developed European economies along with Austria, Belgium, Luxembourg, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the U.K.
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.