Hard times can forge a new, strong Europe

Originally published in Forbes Polska.

Forbes: Earlier this year, when I spoke with Prof. David Spiegelhalter, who specializes in the study of uncertainty, he told me that rating agencies and banks always build very precise numbers into their forecasts to estimate events that cannot actually be predicted. Do you think the margin for "black swan" events may have widened in these predictions in recent times?

Mohamed Kande: At least in the short term, the general macroeconomic situation will remain highly unpredictable. We are only just beginning to feel the effects of the changes taking place right now, as well as the impact of technology investment. And yes, a strong sense of uncertainty will accompany all of this. How to manage that uncertainty, and how to run a business under these circumstances, is now a major challenge.

The market is being buffeted by developments triggered by the U.S. administration, the growing competitiveness of the Chinese economy, and the drawn-out crisis in the Gulf. What worries you most as you watch what's happening around us right now?

M.K.: Access to supply chains, and how they continue to evolve, will certainly remain critical for many organizations. Geopolitical tensions will also matter a great deal, particularly in the context of AI development. New trade alliances being formed between countries around the world, and the capital flows that follow them, will also play a significant role.

Which regions and countries stand to gain the most from this, and how?

M.K.: It's hard to say at this point. The American economy remains very strong, and capital continues to flow into Europe as well. At the same time, we're seeing a significant inflow of capital into Southeast Asia. China is doing reasonably well too, and if we're talking about sectors, the Middle East certainly has a chance to become a global AI hub one day. These really are fascinating times.

In your CEO Survey of global corporate leaders, the majority of respondents remain calm and say that over the next year they simply expect... continued revenue growth. Is that wishful thinking?

M.K.: No, companies have simply learned to adapt to a difficult situation. Even in the face of the enormous tension that began building in the market a year and a half ago, when a new geopolitical conflict erupted, boards had to make decisions about things like which technologies they would roll out in the coming years and how much money they would allocate to them. The new situation meant they stopped waiting around before making decisions about anything. That's probably the key shift that's taken place. When a crisis hits, you can't afford to stay still for too long. That's why so many CEOs, watching the economic situation unfold, are able to say that regardless of the decisions they make, they will keep steering their companies toward growth. This isn't wishful thinking. Companies are simply developing shorter-term strategies more and more often, because those work best under current conditions. It's about being an agile company in this environment — agile in decision-making, in capital allocation, in investing, and so on. Agility is becoming the new normal for organizations around the world.

Being agile is difficult in a large corporation.

M.K.: Unfortunately, in today's reality, everyone needs to be able to demonstrate agility. It's now one of the key skills of a good leader: agility understood not just as the ability to quickly adapt a company's operations and make sound decisions at the right time, but to do so under conditions of significant uncertainty — uncertainty that leaders need to learn to accept.

Which sectors stand to gain the most from the changes currently taking place in the market?

M.K.: Certainly all those operating within the broader AI ecosystem. Many technology companies are doing very well today, as reflected in their valuations — both in the United States and in Asia, including China. And I don't just mean semiconductor and chip manufacturers, because AI development isn't limited to technology providers alone. Data center operators, the real estate sector, private equity funds, energy companies, industrial equipment manufacturers, and infrastructure providers are all benefiting from it as well. This extends to the financial sector too, since these ventures require access to significant capital. It's easy to identify which sectors will be the biggest beneficiaries of the technologies being developed today simply by observing where capital is flowing globally and where surplus funds are being invested. Investment flows shape, to a large extent, how economists and market participants think.

For now, the consequence of all these changes is mainly that the world has sped up enormously.

M.K.: In my view, what matters for business isn't so much the accelerating pace of events themselves, but how quickly one is able to adapt to it. The last time we experienced a technological revolution on this scale, change didn't happen at such a breakneck pace. That's why we talk so often today about the need to challenge our own assumptions. Decisions also need to be made much faster than before, as I already mentioned. And when you're constantly re-examining your assumptions, it also helps to have alternative scenarios ready.

When PwC meets behind closed doors to discuss the outlook for the global economy, do you worry?

M.K.: I wouldn't use the word "worry" — I prefer "unease." Unease can stem from a belief that the situation is difficult, but it can just as easily come from a sense that you're not moving fast enough — that, for example, you could use more information to make better decisions. It can be motivating. It's not passive "worrying," but an impulse to act. It's a mindset in which you decide your own next steps, rather than focusing on how the environment — which is changing in unprecedented ways — is determining the situation for you. Many of the events we're observing around the world may look random and unconnected, but together they form a coherent picture of our reality. That's why effective management today requires looking at the world holistically, rather than through the lens of individual events or isolated challenges.

What do these challenges look like at the regional management level in our part of Europe?

Agnieszka Gajewska: I also see the current situation as full of challenges, but at the same time I see a great many opportunities in it. What's more, some phenomena that seem like problems today may actually turn out, at the regional level, to be a significant opportunity for us. Both the pace and the scale of change matter enormously here. We've faced crises before, but in the past they tended to come one after another. Today, many challenges are occurring simultaneously — they're closely interlinked and often reinforce one another. That's precisely what makes business decisions so interesting, yet also so difficult. Many of the issues Mohamed mentioned also carry enormous significance for our region. The emerging AI ecosystem is creating huge opportunities here too — for established companies looking to redefine their operating models, as well as for start-ups. And Central and Eastern Europe, in my view, holds a real competitive advantage here. We have 2.2 million engineers, data analysts, and technology specialists in this region, with the skills to genuinely shape economic and innovation-driven growth. And regional leaders, by tapping into this human potential, are creating the momentum for transformation, growth, and new competitive advantages.

Is doing business here now riskier than in other regions of the world?

A.G.: When it comes to the perception of geopolitical tensions and geopolitical risk, CEOs in our part of the world consider it considerably higher than elsewhere. But we've been living with this reality long enough now to know how to factor it into day-to-day business operations. My only concern would be that short-term shocks and crises, which businesses must respond to today, might distract leaders from making strategic, long-term decisions. When I took on the role of CEO, I developed a strategy called "Vision 2030." It sets out a vision of what the world might look like in 2030 and defines the overall direction of our efforts. But I already know that, in delivering this strategy, we'll need to repeatedly adjust our actions to changing circumstances along the way. The world has become extraordinarily unpredictable, and the pace of major change is now so fast that even the best strategy today has to leave considerable room for flexibility. The key to success is no longer rigid adherence to a plan, but staying consistently on course toward a chosen direction while remaining ready to respond quickly to new challenges and emerging opportunities.

How can Poland benefit from the changes now taking place in Europe? In the West, Germany's role is weakening, competition from Chinese companies is intensifying — how can we increase our influence in Europe?

A.G.: This is definitely "our moment." For the past three decades, we kept asking ourselves how else Europe might benefit us. Today, we can actually help shape it — becoming part of the answer to the challenges our region is currently facing.

Such as?

A.G.: Certainly insufficient innovation, low productivity, and issues related to energy security and the economy's resilience to geopolitical turbulence. As a country, we have many strengths that can help solve these problems. Above all, we have talent. Working with our clients, we're seeing increasingly clearly that Central and Eastern Europe is growing stronger. We're moving away from competing primarily on low labor costs and increasingly building our position on knowledge, skills, and advanced services. This process is already underway, but we can still accelerate it. For many years, our part of Europe struggled with relatively low productivity. Today, thanks to our human capital, technological competencies, and the growing role of innovation, we can become one of the engines of growth and transformation for the entire European economy. That's why, despite everything, I look to the future with optimism.

Przemek Paprotny: Poland has very concrete economic strengths. We're one of the leaders in productivity growth, and a significant share of the value in our exports is now created right here — through local knowledge, expertise, intellectual property, and the added value generated by Polish companies and workers. Compared to the rest of the region, we stand out for our high share of high-tech exports in goods and services. So we're no longer competing solely on cost, but increasingly on innovation, specialist expertise, and the quality of our solutions. Poland is one of the most industrialized economies in Europe. Industry accounts for a significant share of our GDP. And we're no longer talking only about traditional industries or food processing, but about sectors such as chemicals, energy, fuel production, and modern manufacturing companies operating in global markets. On top of that, there's our greatest asset: people. For years, we've been among the European leaders in technical and STEM education. We have a huge pool of engineers, IT specialists, scientists, and technology experts.

Anything else?

P.P.: At a time when artificial intelligence and new technologies are becoming a key source of competitive advantage, this potential matters enormously. We've also seen an important shift in our approach to public investment and security. The past few years have been a period of severe geopolitical shocks, but at the same time they've become a turning point in how we think about economic development. When it comes to defense, Poland is no longer limiting itself to buying equipment from foreign suppliers. There's growing emphasis on building domestic production and technological capabilities. This matters not only for the defense industry. It's also about developing intellectual property, technological competencies, cybersecurity, infrastructure, and modern dual-use solutions — technologies that can serve both military and civilian purposes. In the longer term, this could significantly strengthen Poland's position in global markets and create new export opportunities. All of this gives us a real chance to play an increasingly important role in the European and global economy.

A.G.: I'd add, on the subject of defense, that virtually all of our neighbors are running similar programs today, and our shared new goal in Europe should be to harness this combined strength. Of course, that's not easy — as we can see, international talks on defense spending are highly complicated. But if we manage to act together and combine the potential of Poland, which spends around 5 percent of GDP on defense, with that of the other NATO countries in our region, we could become a truly significant regional force.

Since we're on the subject of defense: doesn't the looming threat of war paralyze some investment decisions made outside our country?

P.P.: It's simply another important factor being factored into decision-making processes today. At the same time, we're becoming a regional security hub and a significant center of expertise in building and developing a modern defense industry. In the coming years, Poland will allocate to security, dual-use infrastructure, and defense roughly the equivalent of our country's entire annual GDP. I deliberately mention these three areas together, because they're closely interconnected. This will be a powerful boost for the economy, since a large share of these funds will be invested and spent within Poland. There's currently a public debate underway about how to more effectively involve the private sector in delivering these projects. For years, many European countries bought defense equipment from global manufacturers. That approach is now starting to shift, and defense spending is no longer viewed purely as a cost — it's an investment in the future. If these programs are designed so that as much of the funding as possible stays within the local economy, investment in security can become a catalyst for industrial development, job creation, protection of intellectual property, and strengthening the economy's long-term competitiveness.

A.G.: The war has become one of the catalysts that pushed us to seriously consider how to strengthen the long-term resilience of our economies. In my view, this could be a very powerful driver of development, and I hope that solutions developed in our region will eventually make their way to the global market. Personally, I believe it would be hard to find a region anywhere in the world as well-prepared as Central and Eastern Europe to deal with adversity and uncertainty. Our greatest "export product" may well turn out to be exactly that — the ability to turn this resilience into real economic strength and growing competitiveness.

Mohamed, do you share that view?

M.K.: For years, countries in your region operated under very different economic conditions. They faced different challenges and developed at different speeds. Today, when there's so much talk about volatility and uncertainty, the people of this region — who have lived with constant change for years — know how to adapt to it. People here know how to handle difficult situations. They don't panic, and they don't sit around waiting to see how things unfold. They act. Central and Eastern Europe can now show others how to cooperate effectively across borders: building joint projects and drawing on a diversity of skills to achieve shared goals. Given the current geopolitical and economic situation, this ability to work together could become one of the region's greatest assets.

That, however, requires strictly political decisions.

M.K.: That's true. But it's a good impulse to act on, and the right moment to tackle these challenges. I'm very hopeful that in the coming years we'll see changes at the European level that foster greater integration and more effective cooperation between all its countries. That would allow Europe to make better use of its potential and respond more effectively to the challenges of the future.

Do you see any early effects from, for example, the Draghi report?

M.K.: The simple fact that it exists and that people are discussing it is already a very positive signal. People are no longer talking about these reports only at the level of general principles. Increasingly, they're focusing on concrete, implementable actions. Gradual adoption of these solutions matters, because trying to solve every problem at once rarely works. Another positive development is the growing involvement of the private sector in public debate. For many years, discussions about competitiveness, development, and economic policy were the domain of public administration and regulators. Today, business is increasingly invited to the table. That's a very good sign. It shows that responsibility for economic development is increasingly being shared between the public and private sectors. There's no shortage of capital in the market. What matters is creating the right conditions for investment. If an environment favorable to investment emerges — with clear rules, stable regulation, and attractive growth opportunities — capital will follow naturally.

What's holding back the inflow of foreign capital into Poland the most?

P.P.: Poland has just joined the elite group of G20 economies, with GDP exceeding one trillion dollars — an enormous achievement. Since joining the European Union, our economy has grown several times over. That shows the scale of the transformation we've been through. We should finally stop seeing ourselves as the "poorer cousin from the East" and start seeing ourselves as an important partner with real influence over the direction of Europe's development.

Do we suffer from impostor syndrome?

P.P.: Perhaps. We should certainly speak far more boldly about what we can offer Europe and the world. We have concrete achievements, real strengths, and competencies worth presenting with greater confidence. At the same time, there remain several areas at the national level that need attention. Poland has a relatively diversified economic structure, which has been a major strength for years. It's helped us weather successive periods of turbulence and crisis while maintaining economic growth. Strong consumption, a developed industrial base, and diverse sources of growth have helped us stay resilient during more difficult periods. Today, however, one of our biggest challenges is private investment. Compared to the EU average, its level remains relatively low. While we perform well in production and consumption — both of which effectively support GDP growth — the scale of private investment in recent years hasn't been as high as it could be.

Why?

P.P.: Partly, this stems from geopolitical uncertainty. Many entrepreneurs are wondering whether to invest here now or wait for more predictable conditions. But equally important are issues around regulatory stability, legal predictability, and the tax incentive system. Mechanisms similar to the so-called Estonian CIT model, which support profit reinvestment and encourage companies to keep growing, are an example of interesting solutions in this space. That said, all developed economies build their success primarily on ongoing, constructive dialogue between business and government. If we want to sustain a high pace of growth and make full use of Poland's potential, we need close cooperation between the public and private sectors. That's the only way to create stable conditions for investment, stimulate innovation, and build competitive advantages for decades to come.

How does the prospect of upcoming parliamentary elections affect investment conditions?

P.P.: The truth is, we don't really know what the private sector expects from politicians, because we simply don't talk about it enough. One of the reasons behind our economic success over recent decades may well have been that politicians intervened relatively little in how the economy functioned. Entrepreneurs and business representatives should take the initiative more actively — putting forward ideas, proposing solutions, and showing politicians proven practices from the world's most developed economies. There are no easy answers here. But if we want to build a competitive economy and respond effectively to the challenges of the future, regular, partnership-based dialogue between business and public administration is simply essential.

M.K.: Politicians and regulations exist everywhere in the world. What matters most is the extent to which political change translates into the regulatory environment businesses operate in. From an entrepreneur's perspective, the most important thing is that the rules of the game remain relatively stable. Companies can function under changing political conditions, as long as the regulations affecting them remain predictable. When every political change brings significant regulatory upheaval, companies become cautious about making long-term investment decisions. There's no shortage of capital in the world today looking for attractive places to invest. Private investors, funds, and companies are actively searching for markets where they can safely deploy capital and grow their operations. Their capital flows to where they see a stable business environment, predictable regulation, and a society and economy capable of withstanding crises and uncertainty. 

Where those conditions are met, capital tends to show up almost on its own.

A.G.: And it is showing up in Poland too. If you look at people like Mati Staniszewski of ElevenLabs or Rafał Modrzewski of Iceye, it's hard to talk about impostor syndrome. These people know exactly what they've achieved, and they're brilliant ambassadors for our entrepreneurship, our innovation, and our ability to build technology of global significance. Still, I have the sense that, as a country and as a region, we still aren't very good at telling the story of our own successes on the international stage. That's an area we still need to work on.

How do you do that?

M.K.: You have to actively build your position, know how to showcase your achievements, and help the world understand better what Poland is today and what it has to offer. You asked about impostor syndrome. Very few people around the world still realize just how many people of Polish descent have achieved spectacular success in the United States and elsewhere in the world. The scale of these achievements can be genuinely surprising. I'm an example of that myself. I got my start in the U.S. thanks to a person of Polish heritage who gave me a professional opportunity. I remember that moment vividly. The Polish diaspora represents an enormous reservoir of potential — a network of connections, experience, and success stories of Poles scattered around the world. Perhaps stories like these are exactly what should be told more. And impostor syndrome does have an upside, too.

What is it?

M.K.: People who constantly question their own achievements usually never stop developing — they keep trying, keep learning, and keep raising the bar for themselves. And even though they sometimes lack confidence in their own success, that unwavering ambition and constant drive to improve often become the very source of their greatest achievements.