Impact'26: Andrzej Domański, Kristalina Georgieva, Martin Wolf | Global Economic Outlook 2026

Added: 2026-05-25

[00:00:00]So, I'm Martin Wolf from the Financial Times. I don't think I have to introduce the people to my left. It's a great pleasure and honor to moderate this discussion um between uh the managing director of the IMF and the finance minister of Poland on uh the issues that have just been raised and some of the wider implications.

[00:00:22]It just so happens um that uh uh in 1989 I made my my first visit to Poland to write about Polish reform. I spent a lot of time with uh particularly finance minister Bosarovich at that time to go over the reforms and what was tried and I've known u a number of his successors since then and I was absolutely convinced that Poland would succeed.

[00:00:50]It's one of my better calls as it were and uh and uh because the opportunity was great as the managing directors mentioned the determination of the people to succeed was so completely obvious and so deeply rooted in the historical experience of Poland and the Polish people. So I wish to congratulate Poland on having been such a success.

[00:01:17]In uh your speech, you emphasize both the achievement and the future which are in some obvious sense more challenging because uh Poland success has been extraordinary. It's a catch-up story. But I've been around so long uh my age is such that I remember when the miracle catchup story of Europe was Italy.

[00:01:42]uh and uh and it really was it was the fastest growing economy in Europe I think in the 1960s continued. So continuing is more difficult than getting there uh because the challenge gets more and more difficult as you get closer to the levels of advanced countries. We've seen this many times. So in that context uh minister how do you react to what the managing director said both about the past successes and their roots I suspect you agree with most of what she said you don't need to say that and what do you think about the challenges that she stressed for Poland and the obvious significance in that context of what happens in Europe both in terms of security in which Poland will play a central role and in economic progress.

[00:02:31]Yes, >> thank you and good afternoon everyone.

[00:02:35]It's uh thank you for this uh presentation and yes as uh Martin V rightly said I of course agree with uh with the message and the Poland is a huge success story that's clear for for everyone uh we managed to rise from the economy worth of 67 billion in 1989 to one trillion economy in 2025 and as managing director just said we overpass uh last year Japan in uh GDP per capita adjusted for purchasing power prices which still for the generation of my parents is difficult to believe when I tell my mother about it she she she doesn't really believe me uh but it's a fact it's numbers and um but of course we achieved that success because of the reforms of the '90s with no doubt because of our membership in European Union and I believe it's my duty to stress it and to remind everyone that if not uh if we wouldn't join uh European Union our GDP would be approximately 40% lower. This is uh this is our uh our estimate. So we benefited a lot thanks to the access to the single market and of course uh to because of the flow of funds. But then of course there are challenges and uh well I I like my Italian friends but I will keep this uh what what you just said as a as a memory and another incentive for us to to work. we know where are uh weaknesses of Polish economy because I believe my job right now is to focus on weaknesses and first of all uh energy and uh still Poland has around 50% of our energy produced out of coal and we can have a huge benefits of reducing it and getting more renewables and more nuclear investing in uh in uh storage, investing in uh in uh nuclear, investing in in grid, then strong capital markets.

[00:04:58]>> We are well aware that uh there's only one country in Europe where households are uh have more savings uh high higher share of their savings in deposits and uh cash than in Poland.

[00:05:15]>> And it is Cyprus.

[00:05:17]>> Mhm.

[00:05:18]Well, I don't want to be so close to Cyprus in this in this statistics. So, we need to develop new tools for people to in uh to save or invest more uh efficiently and we are already doing that. Uh recently, we also created a new tool that will support private equity uh venture capital uh funds in uh in Poland. as I still believe that we need to secure the funding for Polish companies beginning from PowerPoint, beginning for the startups uh through the scaleups to the IPO on the on the stock exchange and we are working on all of that. So this is why I'm pretty optimistic about uh future of Poland and we must be ambitious in our goals. Can I just ask one follow-up question before I return to the managing director? Um, how dependent in your view is Poland's success in future on European reform?

[00:06:25]This a is it possible as you get bigger in a Europe which has not been growing very well and has some obviously very big structural competitiveness problems. Um, is it possible to be as it were a remarkable success when the countries with each most closely tied economically and in other ways are not really doing a great job?

[00:06:54]>> Last year, Poland contributed more to the growth of European Union than Germany.

[00:07:00]>> Yeah, that's what I mean. German economy is still still slightly bigger than than uh than Polish one. Um so we are of course we are demanding reforms. We demand uh acceleration uh in for example the regulation process.

[00:07:19]>> Uh Europe must be uh economic superpower not only a regulatory one. And uh I believe that we have successes in this.

[00:07:29]We convince European Commission to accelerate with this omnibuses packages.

[00:07:35]Uh we are working with this group of the six largest European uh economies also to accelerate uh work in the capital market union. We definitely need strong European capital uh markets. Of course, that being said, we also need uh local national stock exchanges. That's important for for my perspective. But to answer your question, yes, we've our potential, we demand more and we will participate even more actively.

[00:08:07]>> So let me turn to you. What is your reaction to what the minister said and particularly >> are you really at all optimistic? We've been in these debates about capital markets union about innovation. I remember the Lisman agenda and all this.

[00:08:24]I've got of course our departure was a catastrophe for us but leave that aside but people are pretty cynical about whether this is going to happen.

[00:08:35]>> Well u I am a bit more in the minister's camp. Uh I think two things are uh going on that are very helpful to Europe. The one is the kick that Europe got uh in terms of um transatlantic relations. I think it is very healthy for Europe to think about depending on itself for many many things and that is mobilizing and I see it I see the discussion on defense moving towards action. uh I see the uh very important pivot that Europe has taken on trade reaching out to other markets and developing trade agreements.

[00:09:25]Remember there was one that was hanging loose for 25 years and boom it got finished. So there is this factor that Europe now recognizes that it has to uh step on its own feet more firmly. Uh and the second factor is that um uh where we see pressure is frankly internally in Europe when you have populism threatening in some countries uh follow up to the British example uh when you look at the UK and you know that the UK probably lost somewhere between two and 4% % of GDP as a result of Brexit >> generally thought to be more.

[00:10:15]>> Yeah. Well, I'm you know I'm kind um so when you look at this then I think internally in Europe there is now a at this in pressure for Europe to do better. I'm also positive because of the example of countries that have g gone through tremendous pain during the Euro zone crisis.

[00:10:41]Greece, Portugal, Ireland, they are now among the best performing European.

[00:10:50]>> Spain too.

[00:10:50]>> Spain. Yes, Spain is performing fantastically. So what that shows is what you went through pain bringing tremendous gain has happened in other parts in Europe. And when I talk about the role of Poland as a driver of change, I do believe that you can unite those that have gone through painful transformation and with their strength with your collective strength, you move Europe forward.

[00:11:25]>> So Minister, it's a the managing director has a very interesting perspective in a sense.

[00:11:31]I'm I'm not asking you to agree with this in quite this way, but she's suggesting that the threats of today's world, particularly the transformation of American policy, American trade policy, American security policy, and maybe she didn't mention it, China's competitiveness challenge, which sure, which is obviously formidable, can be a stimulus to really rapid acceleration of reform in Europe. Do you see that? also and also the fact that there is evidence that very difficult things can be done and that evidence is what you need to deploy to force the rest of Europe to get off its uh path.

[00:12:17]>> So does insecurity encourage you?

[00:12:23]First of all, let me say that after so-called liberation day beginning April 2025, uh there were many fears that Europe will split, that each country will try to play its own interest uh against each other to get to be slightly less punished by US tariffs and it didn't happen. we remain remained united >> and uh Europe showed solidarity then uh I'm optimistic also as you said uh Europe first of all I believe in Europe >> and uh whenever I go uh to US >> uh US is good example because when you are in US you feel European that's how I Uh and u we also started to as Europe to take our security seriously. It was very difficult for for us three years ago to convince many European partners to spend more on defense. As you may know, we my country spends close to 5% of our GDP and currently I believe only Lithuania spends slightly slightly more uh in terms of GDP of course but finally with little help help of JD Van's uh speech in Munich uh we convinced Europe that we need to take security more seriously and we all need to increase spending on on defense.

[00:14:10]and it's happening and uh with some okay there are still some countries that uh are very far away from Moscow and they don't feel this threat but in general we are all increasing spending on defense and as uh Christiana just said we need to spend this money really wisely I want strong polish defense industry I this is why close to 90% of funds uh for the safe instrument we will purchase uh from from Polish uh manufacturers from Polish uh from Polish companies and I need the strong defense industry here and I of course wish to have strong European defense uh defense industry uh as well.

[00:15:00]So to reply to your question, yes, I believe that when there is an external maybe not only always threat but a challenge, Europe can uh hold together and uh get with some uh resolutions.

[00:15:16]>> Is that your perspective too?

[00:15:18]Uh yes, I think the u history of the European Union uh has been one of acting under threat.

[00:15:30]Of course, we can say it is better to act when things are good. There are no threats.

[00:15:37]But reality, and we have this saying, fix your roof when the sun is shining.

[00:15:43]Reality is human nature. When do we fix our roof? When it's raining. uh and I think that that uh this let me let me step back and say we are in a world of high uncertainty and repetitive shocks in this world.

[00:16:03]Individual small countries are lost but together the European Union represents a mighty force.

[00:16:15]deploying this force is important for Europe. It is important for the rest of the world and I think that we are now seeing that reemergence of recognition uh that this strength uh has to be put to good use. I was an European commissioner. I spent seven years in Brussels.

[00:16:37]Some people spent seven years in Tibet.

[00:16:39]Mine were mine were in a different place. I arrived in Brussels in 2010.

[00:16:46]At that time, the size of the European economy was about the same as the size of the US economy. Where we are today, the US is way above than Europe. Why?

[00:17:01]Because the US had productivity gains year after year after year. because US has deep capital markets and it is attracting uh capital from all over the world and because it has higher tolerance for risk and lower barriers of regulation.

[00:17:19]uh Poland is a good example that it can be done in Europe and I think the task for Europe is clear and the urgency for Europe to act is so very obvious that I think we will see uh Europe moving u with your leadership your help I I think Europe would do just uh fine >> in the few minutes we've got left I think it would be remiss if we didn't talk about the implications of the big shock of today um oil shock and um two questions very very quickly for both of you um what happens to the world economy if how significant is it in your view if you altered your view just published in the WEO but it's already quite a while what happens if the straits remain closed and the second question is is this the definitive wake cap call particularly for Europe which is dependent on imported fossil fuels for the accelerated shift to renewables.

[00:18:27]Your both of you please manag or would you like to start?

[00:18:32]>> Okay. So uh what what we face today is um a large global and asymmetric shock.

[00:18:43]It is large because we are we have lost 13 million barrels of oil during COVID.

[00:18:52]We shrunk consumption by 12 billion. So it's a massive shock. It is global because even if you are an exporter, prices, these are globally traded communities. Prices are up, inflation is up. And it is asymmetric because it hits importers more and it hits countries with no fiscal space even harder.

[00:19:19]So as of today, we have no certainty how long this would last, but we know that impact is already baked in. If the war ends tomorrow, it would take four months. Y >> for resumption of activities. If it is prolonged then we should expect that growth will slow down even further. It has slowed down already a little bit and inflation would go up. What does that mean? We need to watch three things. We need to watch longevity.

[00:20:00]We need to watch impact on infrastructure. By the way, so far the destruction of infrastructure has been minimal. It can be much worse and we need to watch what is happening with prices and inflation. I personally am very concerned that majority of economies and policy makers are still still looking at this as a transitory short-term event. It is not. And therefore, our advice to policy makers is be very careful how you use your your scarce fiscal space because you may need it for a longer time. Um my uh optimistic view is that whenever we have an energy shock a year to 18 months later our energy efficiency improves dramatically and we find alternatives.

[00:21:02]Uh so in a year year and a half there would be some positives. Question is we need to buckle up for this next year to 18 months. So this is another of those cases where very painful, very big shock, but a crisis might accelerate necessary reform and change. You have the last word, Minister. As I I agree that uh this could uh what's happening right now in Armus could uh uh could accelerate the process of electrification.

[00:21:36]uh and in Poland I believe that uh it's particularly uh important to to to to speed up this uh this uh this process uh and maybe but of course it will take years not weeks not months >> um and uh well it's not a shock it's it's not a conflict that we started >> but our people our drivers our economies is is paying uh is paying the price uh for uh for it.

[00:22:10]Um for me it's also important let me say it that um another another uh consequence of this high oil prices is better uh income for Russia >> and for Russian budget.

[00:22:28]>> Uh and uh we know that sanctions work.

[00:22:32]We know that Russian economy was under huge pressure and now because of this because of high oil prices we are giving Putin uh additional uh the markets or the situation gives gives Putin additional uh support and also drawing attention away from what's happening right now in in Ukraine. So you've mentioned this macroeconomic implication. I'd like to add this political uh or strategic implication for for our region.

[00:23:04]>> We are basically at an end unless you have >> a tiny remark as concluding tiny remark.

[00:23:11]Yes, please.

[00:23:11]>> I have a very tiny three words remarkable.

[00:23:21]>> Thank you.

[00:23:24]Since I don't know alas what that means.

[00:23:27]>> Good job poland.

[00:23:28]>> Good job pol uh uh very good. I would remind you I think you quoted this I think Jean Monet who said that Europe is made in crisis.

[00:23:39]Um well in that case we can say the world is very helpful to Europe at the moment because it is generating more crises more together of different kinds than I have seen in a professional life that has now been as professional economist nearly uh 55 years. So thank you world.

[00:24:03]We are going to do very well in Europe as a result of these successive disasters. But I have to say I would rather do without them. Thank you very much. Very good discussion I think.

[00:24:14]Thank you.