Poland feels economic crisis even harder
The government will revise plans for the adoption of the Euro until August in light of the deteriorating economic outlook. The number of insolvent companies increased by 53% in the first half of 2009 bringing it up to 309 and this downward trend worries many analysts. The effects of the negative news were further intensified when the both OECD and the IMF published reports predicting GDP shrinkage in 2009 of -0,4% and -0,5% respectively. The date came to light not long after the government revised its budget deficit plan for this year, increasing it to PLN 27 billion. To alleviate concerns of foreign investors, the government successfully negotiated a loan deal with the World Bank: PLN 4,5 billion will be made available to the country to support the reform of healthcare, education and the social system.
Analysis and forecast (↑ increasing risk)
June and July marked a turning point in the Polish economy. More and more negative economy-related news surfaced, showing that Poland will eventually be affected more seriously by the global economic crisis than previously forecasted. All GDP-growth forecasts predicted positive values until June, with the Finance Ministry being the most optimistic. The minister still expressed his hope that the economy will grow by 0,2% this year, but this view cannot be held any longer. The OECD was the first to publish a negative outlook with 0,4% contraction of the economy and the IMF did not lag far behind. The Monetary Fund sees a slightly worse course for the Polish economy, expecting a 0,5% drop in GDP. However, everyone agrees that Poland will see moderate GDP growth in 2010, which is in contrast to the outlook of the Euro area. The OECD cites several reasons for Poland’s mild exposure to the crisis: the country’s modest trade dependence, historically low interest rates, moderate indebtedness of the private sector and large infrastructure projects thanks to EU-funds.
But the example of different CEE states could mean more trouble to Poland. Each of them were forced to gradually publish deteriorating predictions after the initial, optimistic forecasts. To some extent, Poland’s situation may mirror that of its neighbours.
Source: Websites of the OECD and the IMF