Poland leads way to growth: The economy is improving after three hard years: now the people want to reap the benefits. Adrian Bridge reports

WHEN Poland decided in January 1990 to dive into the deep end of capitalist economics, Stefan Lewandowski was one of many to have severe misgivings: 'It was a classic case of sink or swim,' he recalls. 'The problem was, we had not even checked to see if there was any water in the pool.'

Today, after three years of soaring inflation, rising unemployment and plummeting production, Poland at last appears to be coming up for air. And Mr Lewandowski, who heads one of the country's more prosperous manufacturing concerns, in wooden furniture, has emerged as one of the winners.

While many of Poland's state-owned companies squirmed over the transformation, his privately-owned Haste International went from strength to strength, boosting its number of employees from 400 to 700, acquiring three new factories, and expanding exports to the lucrative German and Scandinavian markets. With turnover already at about pounds 28m last year, the company seeks to triple production in the coming years and, in addition to increasing exports, plans to make inroads into the domestic market.

'For the nation, 1990 represented a great chance,' says Mr Lewandowski, referring to the 'shock therapy' economic reform programme. 'The future of Poland was suddenly put in the hands of people like myself.'

After a shaky start, the gamble appears to be paying off. Poland's private sector, much of which still consists of small-time trading at street kiosks, now employs more than half the country's workforce and yields just under 50 per cent of its Gross Domestic Product. The government says there are now more than 200,000 registered private companies, some 7,600 of which have received some foreign capital.

While private businesses have been booming, many of those in the state sector - previously condemned en masse as no-hopers - have also shown signs of responding to free-market disciplines. In a recent report, based on a survey of a cross-section of Poland's 8,000 state enterprises, the World Bank concluded that many had broken free of Communist-style economic thinking and were playing a crucial part in Poland's export-led recovery.

'The idea that all the country's industrial base was an albatross has proved unfounded,' said Ian Hume, Warsaw representative of the Washington-based World Bank. 'Some of the state firms have adapted very well. Although many of the plants look pretty run down, the quality of goods that come out of them is surprisingly high. They may not always match up to goods produced in the West, but there is a market for mediocre products at low prices. Poland has found itself in a good position to supply that market.'

With private enterprise flourishing and public firms becoming more efficient, the 40 per cent fall in industrial production since 1989 was halted half way through last year and, in what would be a first for any post-Communist European country, actually looks set to grow by 2 per cent this year.

Further good news is expected this month when the International Monetary Fund may approve a new dollars 660m ( pounds 455m) standby loan, which, in turn, should bring fresh credits from the World Bank and cuts in Poland's international debts of some pounds 34bn.

It all sounds very encouraging. But for many Poles, whose real wages have dropped considerably since 1990, the talk of success remains unreal. Social tension is running high, as shown in the wave of strikes by miners in Upper Silesia late last year, and, more recently, by textile workers in the Lodz region. With inflation still hovering at 40 per cent and unemployment expected to rise to more than three million this year, many feel the good times are still a long way off.

'It is far too early to talk of Poland having turned the corner,' warns Mr Lewandowski. 'We have embarked on a long and difficult journey. Maybe we are now half way there. The problem is, we have already used up 90 per cent of our energy.'