Rose-colored vision?

Entrepreneurs in Poland rank first in Europe and sixth in the world when it comes to optimism, according to Grant Thorton's International Business Report 2007 (IBR 2007), which based its rankings on surveys of small and medium-sized enterprises (SMEs) around the world. In Poland, the survey was conducted last November among 250 entrepreneurs.

The ranking was determined by calculating the percentage of optimistic respondents in a given country over those who were pessimistic.

With a score of 78 percent, Poland moved up 17 places in the global ranking. Last year it scored 42 percent (23rd overall), while in 2006 it stood at a mere 26 percent (20th overall). Optimism has grown by 110 percent since 2004, when Poland joined EU. "Those who consider Poland to be the land of malcontents should revise their opinions," said the president of Grant Thornton Polska, Andrzej Kinast.

When it comes to specific areas entrepreneurs are optimistic about, 68 percent of the respondents predict a growth in sales, 62 percent expect increased investments in durable assets, 48 percent foresee a growth in sales prices, while 44 percent think there will be growth in real estate investment.

Only 26 percent of respondents expect a rise in exports, but 42 percent believe that employment will increase in 2008. The latter figure is fairly reliable since expectations in previous years have been confirmed by actual trends, Kinast stressed.

Why so happy?

Though volatile and difficult to measure, the mood among entrepreneurs is as important a factor in the decision-making process as objective macroeconomic facts, said Andrzej Arendarski, the president of the Polish Chamber of Commerce (KIG).

In Poland, the high level of optimism has been fostered mainly by the economic situation, according to 69 percent of respondents, while 41 percent cited the political situation and 20 percent pointed to exports (respondents could choose more than one factor). Other key factors included intuition, monetary policy and the availability of a qualified workforce.

However, analysts interviewed by WBJ agreed that economic prosperity was the key factor.

"The respondents based their judgement on the past, not the future, and last year was very good," Arendarski said. The economic prosperity was all the more notable since it followed a period of slower growth, Ryszard Petru, Bank BPH's chief economist added.

The political situation and the victory of Civic Platform in October's parliamentary elections contributed significantly to the jump too, since businesses consider this party to be free-market and pro-business oriented, Grant Thornton's analysts said. "If the research had taken place at another time of the year, its outcome would be different," Kinast admitted.

Not so optimistic next year?

Optimism may be lower next year. The year 2008 is expected to see GDP growth of about 5.5 percent - as compared with over 6.6 percent this year. Higher inflation and interest rates are also expected. Although some analysts see a threat in the current US subprime mortgage crisis, Kinast stressed that any potential threat should result from internal, rather than external, factors.

"Poland is not as heavily reliant on exports as Germany is, for example," he explained.

Still, it appears a slowdown will not hit as hard as it did in the late 1990s, said BPH's Petru.