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The Warsaw Voice » Business » June 3, 2009
ECONOMY
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Crisis Not So Dire After All
June 3, 2009 By Andrzej Ratajczyk   
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Poland is coping with the global economic crisis much better than other countries and is one of the few European Union economies which is expected to grow this year.

Finance Minister Jacek Rostowski told a news conference that one might speak about the Polish economy with "relative and moderate optimism," in view of expectations that Poland's GDP will record growth when first quarter results are announced. "This fact is of key importance and puts us apart from other countries," he said.

Deputy Prime Minister and Economy Minister Waldemar Pawlak also believes that the Polish economy is faring better than those of its neighbors. "The weakening of the zloty has provided a cushioning effect," Pawlak said.

Pawlak quoted reports by the European Commission and Eurostat, which expect that the Baltic economies will contract this year by 10-12 percent and the German economy by 6 percent. "Meanwhile, in Poland the projection is for positive growth, with some pessimistic forecasts putting growth close to zero," Pawlak said.

President Lech Kaczyński is less optimistic than the government in his assessment of the condition of the Polish economy. In an address to the parliament May 22, Kaczyński said a major recession could also be expected in Poland due to the global financial crisis. He called on the government to take coordinated and effective measures to put the Polish economy right. Kaczyński said the global crisis had become increasingly visible in Poland and was felt by entrepreneurs, employees and pensioners. Kaczyński added it was impossible to ignore growing signals indicating that Poland might slide into stagnation or even recession. He cited an International Monetary Fund forecast that Poland's GDP will drop by 0.7 percent in 2009 and the European Commission forecast of a 1.4-percent decline.

According to Kaczyński, the 2009 budget is based on unreliable assumptions and stretches the truth. Since 2008, there have been problems with budget implementation because the government has been unable to balance revenue and expenditure, requiring a revised budget.

The government has already become reconciled to the need to amend the budget law, but amendments will not be forthcoming before the end of June. The 2009 budget law projects a growth rate of 3.7 percent, but the Finance Ministry now officially puts this rate at 1.7 percent. Cuts in budget expenditure totaling zl.18 billion were made in December 2008 with the latter rate in mind. Recently, however, the ministry projected that the growth rate might reach only 0-1 percent.

The stabilization and development plan the government put forward in late November was supposed to help alleviate the crisis. The most important goal of the zl.91-billion package was to ensure financial stability and stimulate economic growth.

Guarantees for banks and businesses account for half of the money set aside for fighting the crisis. Projects partially funded by the European Union will also be supported to the tune of zl.16.8 billion. For several months, the government has been working on an anti-crisis package designed to help businesses and employees. The package is focused on job retention and assistance to people who have already lost their jobs.

Pawlak hopes the parliament will soon pass the anti-crisis legislation and that it will come into force before the summer recess. Temporary subsidies to employee wages would be paid from the national budget to employers who retain jobs. Additionally, employers could send employees who temporarily have no work to training and postgraduate courses. The courses would be almost 100-percent funded by the state and the employees would be paid stipends instead of wages. The refunds might reach up to 90 percent of the price of the courses, but the employer would not get more than three times the average wage. Employers would also have the right to organize their staff's work more flexibly. Workers would be allowed to work extended shifts when their company gets more orders and shorter shifts when the number of orders drops.

Recent macroeconomic data confirm that Poland's economic situation is relatively good. Although in April industrial production decreased in Poland by 12.4 percent year on year, the drop was much smaller than the EU average of almost 20 percent. According to the Central Statistical Office (GUS), if seasonal factors are taken into account, industrial production was down by only 8 percent compared with April last year, and up by 0.9 percent compared with March 2009.

Retail sales data are even more optimistic. In April, retail sales increased by 5 percent month on month and 1 percent year on year. In March, retail sales fell by 0.8 percent year on year. It is also optimistic that the outlook for most segments of the service sector improved in May compared to April. According to GUS, the general economic climate index in manufacturing stood in May at -5 points and was higher by 3 points than in April. In construction, the index stood at -11 points compared to -17 points in April. In the retail sector, the index stood at +1 point versus -3 points in April.
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