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The Warsaw Voice » Business » August 29, 2012
Business & Economy
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Symptoms of Crisis
August 29, 2012   
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Most forecasts indicate that the eurozone will slide into recession this year. This is bad news not only for the eurozone countries but also for Europe as a whole. Poland is no exception because the 17 nations using the euro are its main economic partners. There is little consolation in the fact that Germany, which is the largest market for Polish products and services, will likely avoid recession. The growth of the German economy is expected to be uninspiring—0.9 percent this year and 0.8 percent in 2013, according to the most recent projections.

The Polish economy, which so far has been growing relatively fast, is also expected to slow in the coming months. Many economists say external factors such as a drop in exports to recession-hit eurozone countries, are not the only reason behind the anticipated slowdown. Internal factors such as failure to carry out major labor market reforms, will also have an adverse impact on the Polish economy. Another problem is that the investment rate is low in Poland because of a low savings rate.

For the time being, there are no signs that Poland’s GDP will fail to grow by the 2.5 percent planned in this year’s budget. But the increasingly evident symptoms of an imminent crisis should not be ignored. Among such worrying signals is the growing number of business bankruptcies.

In the first seven months of the year, 547 firms went bankrupt in Poland, according to credit insurance company Euler Hermes. This represented a 21-percent increase from a year earlier. Businesses in the construction sector are in the most difficult situation—they accounted for a third of the bankruptcies.

But the most spectacular bankruptcies recently have been those declared by firms in the tourist sector. Nine travel agencies went bankrupt from the beginning of July to mid-August. The problems of the tour operators spoiled the vacations of thousands of Polish tourists, who had to return home early. The spectacular bankruptcy of the air carrier OLT Express, which offered domestic and charter flights, clearly contributed to the troubles of the tourist sector. By offering cheap plane tickets, with prices starting from zl.99, OLT Express had won more than 70 percent of the market for domestic flights within four months. However, before long it turned out that this business was not sound and had to collapse sooner or later.
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