Poland has been a member of the European Union since 2004, but has not decided to join the monetary union yet. Have Poland benefited or lost from this decision?
For the last two years, starting from the COVID-19 pandemic, the Polish zloty, like other currencies of Central European countries, has been significantly depreciated. This process intensifies during the Russian full scale attack on Ukraine. In 2022, the Euro exchange rate was close to historical highs, even reaching the level of PLN 5.00. The level considered natural by economists is defined as around 4.25. This means a weakening of the local currency by about 15%.
This level of the currency depreciation significantly contributed to the increase in inflation in Poland in 2022. At its peak, in November, it reached 17.9%, with the average inflation in the euro area in the comparable period at around 10.6%. In order to counteract the depreciation of the zloty and increased inflation rate in Poland, interest rates were raised from 0.1% to 6.75%, which greatly affected the cost of credit. In the eurozone, such significant increases were not necessary at that time.
The conservative coalition ruling in Poland emphasizes that its own currency is important for sovereignty. However, the sovereignty of the National Bank of Poland often translates into a lack of independence and politicized management by President Adam Glapiński, who in the past was an active politician of the ruling party. At the same time, a strong campaign is underway to discourage adoption of the euro in Poland. As a result, the percentage of supporters of the euro in Poland oscillates around 50%, compared with support for EU membership reaching even over 90%.
Will Poland decide to join the Eurozone after the 2023 elections? It is possible, but it will have to be preceded by a reliable information campaign on this subject.