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The Warsaw Voice » Business » October 8, 2008
ECONOMY
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Poland Resistant to Crisis, Minister Says
October 8, 2008   
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The Polish economy is "exceptionally resistant" to the global financial crisis, Finance Minister Jacek Rostowski has insisted, while warning against fanning fears of a financial market meltdown here.

In a debate in the lower house of parliament on the global crisis Oct. 2, Rostowski said that the budget adopted for 2009 guaranteed the stability of the Polish economy. It foresees reducing the budget deficit, a move expected to considerably enhance Poland's credit rating, said Rostowski. He added that is especially important in the face of twists and turns in the world economy.

Rostowski also said Prime Minister Donald Tusk's announcement that he wanted Poland to enter the euro in 2011 showed investors the direction the government's financial policy was heading.

Rostowski said new legislation aimed to strengthen the Polish financial system: specifically, introducing regulations in line with the European Union directive on financial instruments. The bills, mainly designed to secure the interests of small investors, have been passed by deputies and are waiting to be signed into law by the president.

Rostowski said turmoil on world markets had so far not had a dramatic impact on Poland, which attests to the exceptionally good shape of the Polish economy-proved by its strong economic indicators and the high confidence investors place in this country.

"Our economy is exceptionally resistant to negative influence from the global crisis," said Rostowski. "We are one of three countries, along with Finland and Slovakia, the best prepared for difficult conditions."

Rostowski said that the factors working in Poland's favor included relatively fast economic growth and macroeconomic stability. "We have a low public finance deficit and low current account deficit. Due to the global slowdown and falling prices of raw materials, it will also be easier for us to meet the inflation-related criteria, which in turn will help us meet the Maastricht treaty criteria and facilitate our entry into the euro zone," said Rostowski.

He ruled out state intervention in the economy as a result of the global crisis. "Adequate procedures have long been at hand for the central bank to apply in case of any irregularities whatsoever, for example in cashflow between banks. But for the time being, nothing of this kind has taken place."

He argued that fanning fears of an imminent crisis would be irresponsible. "In spite of turbulence on world markets, the Polish economy is in good shape," he insisted.

He said that the Financial Stability Committee had adopted an emergency national plan for the financial sector in case of a crisis in Poland. The plan remains confidential, as otherwise some institutions might undertake risky decisions, anticipating they would be rescued by the government if they got into difficulties.

"Under an agreement between financial supervisory bodies of all European Union member countries, a joint effort may also be made to counteract the effects of crisis," added Rostowski.

L.Ż.

Price hike feared
Bank bankruptcies in the United States may lead to a financial crisis in Poland, according to 47 percent of those surveyed by the GfK Polonia polling center for Poland's Rzeczpospolita daily.

Forty-six percent of the respondents expressed no such fears, and 83 percent said the financial meltdown in the United States might drive up consumer prices in Poland.


Experts optimistic
The latest financial turmoil in the United States will not seriously affect the Polish economy, according to most prominent economists here. Polish experts agree that the U.S. crisis has been brought about by the inadequacies of the American banking system and the risky investment policies of the country's banks.

Stanisław Gomułka, chief economist at the Business Centre Club, a leading Polish business organization, notes that the main problem is that the latest financial problems in the United States have coincided with an economic slowdown around the world, "which is only natural after several years of rapid growth," as Gomułka put it. "Some countries are bordering on recession," Gomułka said. "But a deep crisis where economic growth is gone, unemployment goes through the roof, and production plummets, is just not happening. Still, governments have to take preventive measures because if they fail to do that on time, the financial crisis may spread throughout the economy."

Poland may report slower economic growth over the next two or three years, according to Gomułka, its GDP growing around 3 percent annually. This year, Poland's GDP is expected to grow by 5.5 percent.

Hanna Wasilewska-Trenkner, a member of Poland's rate-setting Monetary Policy Council (RPP), says the Polish economy continues to grow at a quick pace even though GDP expansion in the next few years will be slower than previously. The ongoing crisis will not harm the Polish economy, Wasilewska-Trenkner added. "Poland has a large market and I do not suppose domestic demand can shrink significantly enough to hurt economic growth," Wasilewska-Trenkner said. "However, financial speculation may prompt banking supervision authorities and financial institutions to enforce more restrictive lending policies."

According to Polish financial policy makers, the Polish economy and financial institutions require no urgent action from the government for the time being to protect them from the turbulence on international markets.

Ryszard Petru, chief economist at BPH bank, says people's savings in Polish banks are safe. "There is no reason to panic," Petru said, adding that all bank deposits of up to 22,500 euros are insured and guaranteed by the Bank Guarantee Fund, which pays them out if a disaster strikes.

"Obviously, we will feel the fallout of the crisis on global markets," Petru said. "Mortgage loans will be harder to obtain, economic growth will slow down, and wages will be rising at a slower pace. Fewer new jobs will be created, and consumers who have taken out loans will probably have to pay higher installments on them. But the economy will continue to grow. There's nothing to be afraid of."
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