BY MOST MEASURES, POLAND CONTINUES to be one of the leaders in the post-communist economic transition. Gross domestic product (GDP) has been growing at an increasing pace since 1992, inflation rates have fallen dramatically from the near-hyperinflationary levels of late 1989, and foreign trade has been definitively reoriented toward the developed Western economies. Even according to official statistics, more than half of Poland's income and employment now originate in the private sector. The National Bank of Poland's (NBP) mid-May decision to float the zloty can be seen as the most recent sign of progress - none of the other post-communist economies that have achieved macroeconomic stability have been willing to permit market forces to influence the course of foreign economic relations so directly. On the other hand, there are indications that Poland's economic recovery is now threatened by an increasingly serious set of problems linked to inflation and electoral pressures. If not handled well, these problems could spell the beginning of the end for Eastern Europe's longest and strongest recovery from the transitional recession.

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