Why so different from other CEECs – Poland’s cyclical divergence from the euro area during the recent financial crisis

The aim of the article is to provide a plausible explanation for the relatively good performance of the Polish economy and the resulting cyclical divergence from the euro area during the recent financial crisis. The investigation of the factors which contributed to this divergence is particularly important in the light of Poland’s prospective accession to the euro area, as it may indicate the problem of asymmetric shocks affecting both economies or asymmetric responses to shocks. The results point out to two reasons for the differential output trajectory in Poland as compared to other CEECs: (i) lower exposure to foreign shocks being the result of a lower degree of economic openness, and (ii) resilient internal activity, which may be the result of structural characteristics of the Polish economy. The recent cyclical decoupling might, however, contribute to the acceleration of Poland’s real convergence to the euro area and consequently speed up the cyclical convergence process.