Prof. Witold Orłowski
Chief Economic Advisor at PricewaterhouseCoopers (PwC), and former chief economist to the former President of Poland Lech Kaczyński
Expert comments
photo: Tomasz Adamowicz (Forum)
The economy is in quite a good condition, without major disequilibria Marek Belka’s interview touches many important questions about the Polish economy, both of a short-term and a long-term character. The most important short-term issue is whether the economy is adequately prepared to cope with the current economic slowdown. The slowdown, already clearly visible in the published data, has its roots in the eurozone recession. Given the scale and the depth of the West European problems, eventually cumulating in the major slowdown of the German economy, a painful slowdown in Poland – or even a recession, if things get worse - is obviously unavoidable. The real question is whether Poland is facing a relatively short period of problems, with faster GDP growth returning over 2013, or a much more serious economic crisis. Belka’s view, which I tend to share, is relatively optimistic, expecting the acceleration of growth in the second half of 2013. On the one hand, one can assume that the worst part of the eurozone crisis is over. On the other hand, it is true that the Polish economy is in quite a good condition, without major disequilibria that could lead to a financial collapse. The only unknown factor is how deep and persistent the deterioration of the business sentiment is. If the current wave of pessimism continues, both the fiscal and monetary authorities of Poland will have limited room for maneuvre in their policies to stimulate growth. by Witold Orłowski
Consumers and businesses are more pessimistic about the economy Prof. Krzysztof Rybiński
Professor and rector of Vistula University in Warsaw and a former deputy governor of the National Bank of Poland from 2004 to 2008
The consensus view today is that the Polish economy will have two weak quarters in 2013, and will start recovering in the second part of the year. Fiscal consolidation will be temporarily halted to avoid too much drag on economic growth, and monetary policy will be relaxed with inflation falling below the central bank target of 2.5%. In 2014, Poland will again be on the path to joining the Eurozone a few years later, which is Poland’s key strategic priority given historical experience and geopolitical factors. There are, however, several risks to this consensus scenario. The crisis in the Eurozone may deepen, as indicated by exploding public debt in Greece, Spain and Portugal, and by growing pains in France. EU financing of public investments in infrastructure, which has added 1-2% annually to Polish growth in the past few years, is coming to an end. Consumers and businesses are more pessimistic about the economy than after the collapse of Lehman Brothers. Poland is facing its own fiscal cliff with public debt approaching the constitutional limit of 60% of GDP. Breeching this limit will invite massive fiscal tightening that will throw the economy into deep recession. If these risks materialize, and Polish economy does fall into recession, authorities will have very few options available. Interest rates can be reduced but fiscal policy will remain heavily constrained by legal debt brakes. And this is just the beginning of tough times ahead. In just a few years time, the post-war baby boom generation will retire. And the pleasant tail wind from EU funding will be replaced by a devastating demographic tsunami. by Krzysztof Rybiński
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