A generation ago, Poland was rationing staples like sugar and flour, and its citizens earned just a fraction, about one-tenth, of West German wages. Today, its economy has surpassed Switzerland’s, ranking as the world’s 20th largest with annual output exceeding $1 trillion.

It’s a historic leap from the post-Communist ruins of 1989-90 to today’s European growth champion that economists say has lessons on how to bring prosperity to ordinary people – and that the Trump administration says should be recognized by Poland’s presence at a summit of the Group of 20 (G-20) leading economies later this year.

The transformation is reflected in people like Joanna Kowalska, an engineer from Poznan, a town of half a million people midway between Berlin and Warsaw. She returned home after five years in the U.S.

“I get asked often if I’m missing something by coming back to Poland, and, to be honest, I feel it’s the other way around,” Kowalska said. “We are ahead of the United States in so many areas.”

Kowalska works at the Poznan Supercomputing and Networking Center, which is developing the first artificial intelligence factory in Poland and integrating it with a quantum computer, one of 10 on the continent financed by a European Union program.

Kowalska worked for Microsoft in the U.S. after graduating from the Poznan University of Technology in a job she saw as a “dream come true.”

But she missed having a “sense of mission,” she said.

“Especially when it comes to artificial intelligence, the technology started developing so rapidly in Poland,” Kowalska added. “So it was very tempting to come back.”

The guest invitation to the G-20 summit is mostly symbolic; no guest country has been promoted to full member since the original G-20 met at the finance minister level in 1999, and that would take a consensus decision of all the members.

Moreover, the original countries were chosen not just by gross domestic product (GDP) rank, but by their “systemic significance” in the global economy.

But the gesture reflects a statistical truth: In 35 years – a little less than one person’s working lifetime – Poland’s per capita gross domestic product rose to $55,340 in 2025, or 85% of the EU average.

That’s up from $6,730 in 1990, or 38% of the EU average and now roughly equal to Japan’s $52,039, according to International Monetary Fund (IMF) figures measured in today’s dollars and adjusted for Poland’s lower cost of living.

Poland’s economy has grown an average 3.8% a year since joining the EU in 2004, easily beating the European average of 1.8%.

It wasn’t simply one factor that helped Poland break out of the poverty trap, says Marcin Piatkowski of Warsaw’s Kozminski University and author of a book on the country’s economic rise.

One of the most important factors was rapidly building a strong institutional framework for business, he said. That included independent courts, an anti-monopoly agency to ensure fair competition, and strong regulation to keep troubled banks from choking off credit.

As a result, the economy wasn’t hijacked by corrupt practices and oligarchs, as happened elsewhere in the post-Communist world.

Poland also benefited from billions of euros in EU aid, both before and after it joined the bloc in 2004 and gained access to its huge single market.

Above all, there was the broad consensus, from across the political spectrum, that Poland’s long-term goal was joining the EU.

“Poles knew where they were going,” Piatkowski said. “Poland downloaded the institutions and the rules of the game, and even some cultural norms that the West spent 500 years developing.”

As oppressive as it was, communism contributed by breaking down old social barriers and opening higher education to factory and farmworkers who had no chance before. A post-Communist boom in higher education means half of young people now have degrees.

“Young Poles are, for instance, better educated than young Germans,” Piatkowski said, but earn half what Germans do. That’s “an unbeatable combination” for attracting investors, he said.

Solaris, a company founded in 1996 in Poznan by Krzysztof Olszewski, is one of the leading manufacturers of electric buses in Europe with a market share of around 15%. Its story shows one hallmark of Poland’s success: entrepreneurship, or the willingness to take risks and build something new.

Educated as an engineer under the Communist government, Olszewski opened a car repair shop where he used spare parts from West Germany to fix Polish cars. While most enterprises were nationalized, authorities gave permission to small-scale private workshops like his to operate, according to Katarzyna Szarzec, an economist at the Poznan University of Economics and Business. “These were enclaves of private entrepreneurship,” she said.

In 1996, Olszewski opened a subsidiary of the German bus company Neoplan and started producing for the Polish market.

“Poland’s entry to the EU in 2004 gave us credibility and access to a vast, open European market with the free movement of goods, services and people,” said Mateusz Figaszewski, responsible for institutional relations.

Then came a risky decision to start producing electric buses in 2011, a time when few in Europe were experimenting with the technology. Figaszewski said larger companies in the West had more to lose if switching to electric vehicles didn’t work out. “It became an opportunity to achieve technological leadership ahead of the market,” he said.

Challenges still remain for Poland. Due to a low birth rate and an aging society, fewer workers will be able to support retirees. Average wages are lower than the EU average. While small and medium enterprises flourish, few have become global brands.

Poznan Mayor Jacek Jaakowiak sees domestic innovation as a third wave in Poland’s postsocialist economic development. In the first wave, foreign countries opened factories in Poland in the early 1990s, taking advantage of a skilled local population.

Around the turn of the millennium, he said, Western companies brought more advanced branches, including finance, IT and engineering.

“Now it’s the time to start such sophisticated activities here,” Jaśkowiak says, adding that one of his main priorities is investing in universities.

“There is still much to do when it comes to innovation and technological progress,” added Szarzec, the Poznan economist. “But we keep climbing up on that ladder of added value. We’re no longer just a supplier of spare parts.”

Szarzec’s students say more needs to be done to reduce urban-rural inequalities, make housing affordable and support young people starting families. They say Poles need to acknowledge that immigrants, such as the millions of Ukrainians who fled the Russian invasion in 2022, contribute to economic development in an aging population.

“Poland has such a dynamic economy, with so many opportunities for development, that of course I am staying,” said Kazimierz Falak, 27, one of Szarzec’s graduate students. “Poland is promising.”

The economic impact of the ongoing U.S.-Israel-Iran conflict could remain manageable for Türkiye if it lasts no longer than one to two months, Treasury and Finance Minister Mehmet Şimşek said on Monday, but warned of broader risks if the war drags on.

The war is in its third week, with no end in sight. The Strait ⁠of Hormuz remains largely closed off, with U.S. allies rebuffing U.S. President Donald Trump’s request for help to reopen the critical waterway, raising energy prices and fears of inflation.

Şimşek said the conflict is unfolding in one of the world’s most critical energy and trade corridors, which is why it could have a major impact not only on regional economies but also on global markets.

“The key issue is how long the war will last and whether it will spread further,” he told an interview with broadcaster Akit TV, noting that the region accounts for nearly one-fifth of global oil supply.

Energy shock fuels inflation risks

Şimşek said disruptions to supply chains and surging energy prices are already being felt, raising concerns about global inflation.

Brent crude oil prices have risen more than 40% compared to pre-war levels, while natural gas prices in Europe have climbed over 56% and jet fuel prices have nearly doubled, he said.

He highlighted the strategic importance of the Strait of Hormuz, warning that any disruption there would have far-reaching consequences for global trade and energy flows.

“There are serious problems both in the Red Sea and Hormuz, affecting transport between Asia and Europe,” Şimşek said, adding that a prolonged conflict could intensify inflationary pressures and disrupt global trade.

Financial conditions tighten

Şimşek said global risk appetite has weakened as investors shift toward safer assets, tightening financial conditions.

“There is a clear move away from risk. Capital is flowing from emerging markets to what are perceived as safer destinations,” he said.

If the conflict persists, the global economy could face a combination of higher inflation, tighter financial conditions and slower growth, alongside risks of recession or even stagflation, he added.

For Türkiye, Şimşek said the economic impact would be limited if the conflict is short-lived.

“If it lasts one to two months, we think the effects will be manageable, but if it continues longer, it could have negative impacts on the current account deficit and inflation,” he said.

Measures to shield markets and consumers

Şimşek stressed that authorities have not underestimated the risks and are actively managing the situation.

The war-related market volatility prompted Şimşek to convene the Financial Stability Committee, which said it would take all necessary steps to ensure market functioning and contain the fallout.

Şimşek said Türkiye has taken proactive steps to limit the spillover effects on financial markets.

Despite being in the region, Türkiye’s stock market has fallen by around 5.5% since the conflict began, compared with declines of over 10% in countries such as Indonesia, South Korea and South Africa, he noted.

However, he acknowledged that bond yields and risk premiums have risen due to heightened uncertainty.

Fuel price system not sustainable if high oil prices last

To cushion the impact of rising energy prices, the government has reintroduced the sliding scale system, which adjusts the special consumption tax (ÖTV) on fuel products and prevents higher oil prices from being fully passed through to consumers.

Şimşek said without the mechanism, diesel prices in Ankara would have reached TL 83.10 ($1.88) per liter, compared with the current level of TL 67.10. Gasoline prices would have been TL 71.11 instead of TL 62.30.

But Şimşek said the system is not sustainable if ‌high oil prices persist, as it is a burden on the budget. He said the government gave up a significant tax income with the scale system to limit the impact of higher ‌oil ⁠prices on inflation and consumers’ purchasing power.

“We wanted to limit (the high oil price) impact on our ⁠citizens. We believe this is temporary. Of course, if it ⁠becomes permanent, it’s not sustainable … We implemented this ⁠system assuming it would be temporary,” Şişek said.

External balances and trade at risk

Şimşek said the conflict could weigh on Türkiye’s external balances, particularly through higher energy import costs.

“I am somewhat concerned about the current account deficit, as oil prices directly increase it, but I believe it will remain manageable,” he said.

Türkiye’s exports to the region, including Iran, total around $30 billion annually, while imports stand at about $19 billion. The country also receives around 10 million tourists from the region, generating roughly $10 billion in tourism revenue.

Any disruption to trade routes or regional demand could therefore have broader economic implications, he noted.

Inflation outlook remains intact

Despite the shock, Şimşek said he expects inflation to continue declining this year, although uncertainty remains over the pace of disinflation.

“We are facing a serious shock due to the war, but assuming it is temporary, inflation will continue to fall this year,” he said.

He reiterated the government’s goal of bringing inflation below 20% this year but said it was too early to assess whether that target would be met under current conditions.

Annual inflation slowed from over 40% at the beginning of last year to just over 30% this January. But a rise to 31.5% last month signaled a slowdown in disinflation.

Encouraged by the downward trend, the Central Bank of the Republic of Türkiye (CBRT) has slashed interest rates by 900 basis points since mid-2025 to 37%.

But it halted its easing cycle last week due to fallout from the Iran war that it said could impact inflation.

The bank said it was closely watching the effects of “geopolitical developments” on the inflation outlook, and it was ready to take more liquidity steps if needed to support markets.

The CBRT also left unchanged its band of overnight lending and borrowing rates at 40% and 35.5%, respectively. It responded to the volatility amid the conflict by taking liquidity measures that lifted overnight rates to around 40%, up 300 basis points from pre-war levels.

Şimşek added that last year’s economic program had proven its resilience despite multiple shocks, including domestic developments, global trade tensions and adverse weather conditions affecting agriculture.

Budget and reserves remain supportive

He also pointed to improvements in fiscal and external buffers, saying the budget deficit has continued to narrow and Türkiye’s reserves have increased.

Still, Şimşek warned that the conflict represents a major external shock with potential implications for the whole economy.

“The war is currently a significant source of uncertainty. We are facing a major external shock that could have serious potential impacts on the current account deficit, inflation, growth and the budget,” said the minister.

“Nevertheless, I am speaking on the assumption that the shock will be temporary.”

This month marks five years since the worst U.S. inflation outbreak in a generation, a defining economic shock that continues to shape policy debates, sway national politics and frustrate Federal Reserve officials trying to restore the pace of price increases to their 2% target after a monumental miss.

When nose-diving inflation at the start of the COVID-19 pandemic touched off ⁠concerns of a dangerous downward spiral in wages and prices, it ⁠was actually considered a good sign when prices across a variety of gauges began rising by more than 2% annually in March 2021. Fed officials even planned to encourage the emerging trend with continued low interest rates.

“We want inflation at 2%, and not on a ​transitory basis,” Fed Chair Jerome Powell said at a press conference that month in a be-careful-what-you-wish-for statement that ​would ⁠haunt the central bank.

Central bankers said they expected inflation to remain above their target that year, but not by much, and that they would wait on any effort to slow the economy with interest rate hikes until the increase proved durable.

But the pace kept accelerating.

At year’s end, the Personal Consumption Expenditures price index the Fed uses to set its target was rising at more than a 6% annual rate, triple its target. It did not peak until passing 7% in June 2022, with the Fed at that point scrambling to catch up with steep, rapid-fire rate hikes.

Inflation as measured by the separate Consumer Price Index topped 9% that month, the fastest pace since 1981, when the Fed was in the process of taming an even worse unmooring of prices.

The scars – political, financial and economic – won’t fade quickly.

Here’s a look at what’s transpired with inflation in the past half-decade:

Staples vs. paychecks

“People hate inflation” was a popular mantra among Fed officials as they pivoted towards a historically rapid series of rate hikes in 2022 to control inflation, even though they ⁠knew tighter ⁠credit would cause hardship by pushing new homes or cars out of reach for some consumers, given the financing costs. Monetary policy works in part by discouraging demand through raising the cost of credit, with weaker demand easing the pressure to raise prices.

An even larger risk was a “hard landing” from inflation in the form of rising unemployment or even a recession. That didn’t happen this time around, even though many top economists thought it was inevitable.

It’s easy to see why Fed officials were willing to take those sorts of risks, however. Inflation acts as a tax and leaves everyone worse off. Over the past six years, in fact, inflation has offset most of the increases in personal income, hitting hardest among the less well-off. A dollar today is equivalent to about 79 cents in January 2020.

For homebuyers, a painful cure

Economists sometimes say the solution to inflation is more inflation, since ⁠eventually high prices will kill demand. But for the Fed, the solution to inflation is higher interest rates. By raising their short-term policy rate, a range of other borrowing costs goes up, particularly home mortgages.

The Fed’s rate hikes starting in 2022 hit at an unusual time. Loose central bank policy that had taken hold during the 2007-to-2009 financial crisis had conditioned ​U.S. consumers over more than a decade to very cheap mortgages – cheaper than at any time in recent history.

The abrupt shift back to what are historically ​more normal financing costs has been a shock. Expectations play a large role in economics and politics, and the public is still adjusting to the fact that “cheap money” is gone for now.

A mortgage rate rising from below 3% to more than 6% adds hundreds of dollars to ⁠monthly payments and ‌can be frustrating for ‌those who find their incomes can no longer support a home purchase.

The battle continues

As the Fed meets ⁠this week, expected to hold interest rates steady, the U.S. is still confronting the aftermath of ‌what economists came to regard as a collision between supply chains constrained by the pandemic and demand unleashed by trillions of dollars of COVID-era federal spending.

At the same time, the Fed’s preferred inflation ​measure remains about a point above target at roughly ⁠3%, monetary policy remains somewhat tight, and a new price shock may be developing with oil prices above $100 ⁠a barrel due to the U.S.- and Israel-led war with Iran and gas prices topping $3.70, about 25% higher since hostilities began on Feb. 28.

President Donald ⁠Trump, who used anger over inflation ​and high prices as a powerful reelection campaign point in 2024, is struggling with continued voter concerns around “affordability,” with food prices still rising, home mortgage rates stuck above 6%, and healthcare and other major costs stressing family budgets.

He promised prices would fall. They didn’t. They rarely do.

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Fitch Ratings sees risks to Türkiye’s sovereign rating and banking sector as remaining limited and manageable if tensions in the Middle East prove short-lived, while it warns a prolonged period of high energy prices could increase vulnerabilities.

The U.S.-Israel war on Iran is in its third week and no end in sight. The Strait ⁠of Hormuz remains largely closed off, with U.S. allies rebuffing U.S. President Donald Trump’s request for help to reopen the critical waterway, raising energy prices and fears of inflation.

Fitch said on Monday that its baseline scenario assumes the conflict will be temporary, in which case the impact on Türkiye’s credit profile and financial system would be contained.

However, the credit rating agency cautioned that persistently high oil prices could add to inflationary pressures and widen the country’s current account deficit.

It said the impact of the conflict on Türkiye and its banking sector would depend on policy response.

Fitch said measures introduced by the Central Bank of the Republic of Türkiye (CBRT) since the start of this month signal a continued commitment to bringing down inflation.

Responding to the volatility amid the conflict, the CBRT took liquidity measures that lifted overnight rates to around 40%, up 300 basis points from prewar levels.

Fitch expects monetary policy to remain relatively tight, forecasting a real policy rate of around 4.5% by year-end, which underpins its projection that inflation will decline to 25% by the end of 2026.

Annual inflation slowed from over 40% at the beginning of last year to just over 30% this January. But a rise to 31.5% last month signaled a slowdown in disinflation.

Encouraged by the downward trend, the CBRT had slashed interest rates by 900 basis points since mid-2025 to 37%. But it halted its easing cycle last week due to fallout from the Iran war that it said could impact inflation.

Fuel mechanism provides buffer

Fitch noted that Türkiye has reactivated a fuel price adjustment mechanism to help contain domestic price pressures amid rising global energy costs.

The sliding scale system adjusts the special consumption tax (ÖTV) on fuel products and prevents higher oil prices from being fully passed through to consumers.

Fitch said the fiscal burden of such measures could be absorbed thanks to available budget space, supported by a roughly 2 percentage point decline in the budget deficit-to-GDP ratio last year.

Banking sector seen resilient

Fitch said Turkish banks are generally well-positioned to withstand potential shocks, citing adequate liquidity and capital buffers across the sector.

These buffers, it said, should help mitigate risks to operating conditions even in the face of heightened geopolitical uncertainty.

Risks rise if tensions persist

While the baseline outlook remains stable, Fitch warned that a longer-lasting conflict and sustained increases in energy prices would pose more significant challenges for Türkiye’s macroeconomic outlook.

Such a scenario could complicate the disinflation process and put additional pressure on external balances, the agency said.

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Tens of millions more people ​could face acute hunger if the Iran war continues ⁠through to June, according ⁠to a new analysis from the World Food Programme (WFP) released on Tuesday, which flagged the gravity of the situation by suggesting this could push global hunger levels to an “all-time” high.

The U.S.-Israeli ​attacks on Iran have choked up key humanitarian aid routes, delaying life-saving shipments to some of the world’s worst crises.

An extra 45 million are projected to be pushed into acute hunger because of rises in food, oil and shipping costs, pushing the global tally ⁠above ⁠its current record level of 319 million, Deputy Executive Director of the World Food Programme Carl Skau told reporters in Geneva.

“This would take global hunger levels to an all-time record and it’s a terrible, terrible prospect,” he ⁠said.

“Already, before this war, we were in a perfect storm where hunger has never been as severe ​as now, in terms of numbers ​and how deep that hunger is,” he added.

Skau said its shipping ⁠costs ‌are ‌up 18% since the U.S.-Israeli attacks ⁠on Iran began ‌on Feb. 28 and that some have had ​to be rerouted. ⁠

The extra costs come ⁠on top of deep spending cuts by ⁠the WFP, ​as donors focus more on defense, he added.

According to the WFP, countries in sub-Saharan Africa and Asia face the highest risk due to reliance on imports, with projected increases in hunger across both regions.

“If this conflict continues, it will send shockwaves across the globe,” Skau said, warning that vulnerable families “will be hit the hardest.”

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Europe’s top development bank, the European Bank for Reconstruction and Development (EBRD), is considering support programs to help businesses in the countries it serves to weather the fallout in the energy, food and financial sectors from the ongoing war in Iran, its president said Monday.

The war, in its third week, has pushed oil prices above $100 per barrel, cut access to fertilizers, food and goods that transit the key Strait of Hormuz and rerouted air travel.

The European Bank for Reconstruction and Development fosters private sector development projects in some 40 countries in Eastern Europe, Central Asia, the Middle East and Africa.

Focus areas for support

“We are really already looking at what we can do to support our clients in the countries most definitely affected,” EBRD President Odile Renaud-Basso told Reuters.

The support, she said, could focus on helping companies afford higher energy prices, access fertilizer during supply disruptions or keep tourism-focused businesses afloat in the likes of Egypt, Jordan and Lebanon through travel disruptions.

“This is a new shock, and we need to be ready to provide support to accommodate this shock,” said Renaud-Basso. She gave no further details on what this support could look like.

Concerns over remittances, project delays

Among issues of concern for the EBRD would be a potential decline in remittances from migrant workers in the Gulf sending money to home countries such as Egypt and Jordan, she said.

The bank is also watching closely for any projects that are delayed, cancelled, or lose funding as a result of uncertainty and higher energy costs.

Macroeconomic challenges

“The cost of funding has been increasing everywhere … that could also create some macro challenges for some countries which already had quite a high level share of revenues allocated to debt repayment,” she said, noting this was an issue for some Mediterranean countries, Egypt, Tunisia and Sub-Saharan Africa.

The yields on U.S. government debt, baseline for the cost of capital, have risen sharply since the start of the conflict.

Meanwhile, Gulf states are reviewing how they deploy trillions of dollars invested by their sovereign wealth funds in anticipation of offsetting the losses triggered by the war.

Energy security and diversification

“What is clear … is that we will see a lot of demand for investment in energy security and diversification of energy,” she said.

Countries such as Türkiye, which have already invested in energy diversification and renewables, are less vulnerable to external shocks.

“That will be a trend that we are likely to see, and a lot of demand for this kind of investment, for example.”

Implications for Ukraine

Renaud-Basso said the Iran war was also “not helpful for Ukraine” because higher energy prices could boost Russian state coffers and stress Ukraine’s balance sheets. The EBRD halted investment in Russia after it invaded Ukraine in 2022.

She also said there “may be some tension on the supply” for weapons for Ukraine.

“For us, it’s very important to continue to support Ukraine, and that the funding committed to Ukraine by the EU in particular is delivered.”

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