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Post by tufta on Sept 4, 2010 4:00:37 GMT 1
3rd September 2010
© Asia Kortas
Poland was the only EU economy to witness GDP growth in 2009
Poland’s economy is picking up speed and accelerating faster than economists’ forecasts, easing concerns about global recovery.
In August, the Purchasing Managers’ Index (PMI) advanced to 53.8 from July’s six-month low of 52.1, HSBC Holdings Plc revealed, citing a survey by Markit Economics. HSBC points out that Poland’s PMI rose to a 37 month high with the fastest growth in production seen since March 2007.
Growth in domestic demand contributed significantly to the figures in August as consumers increased purchases encouraging companies to rebuild inventories. Meanwhile, growth of new export business slowed to its lowest level since October of last year.
“The good news is that the improvement apparently resulted from domestic demand,” said Kubilay Ozturk, an economist at HSBC in a statement. “Domestic consumption was the main factor in Poland’s avoiding recession in 2009.”
Poland’s PMI has remained above the 50-point threshold for the past 10 months, which suggests an overall improvement in the business climate.
Earlier last week, Poland’s Statistical Agency (GUS) said that growth in the second quarter came to a year-on-year increase of 3.5 percent, which fairs better than the 3.2 percent analysts had predicted.
Poland’s was the only EU economy to see GDP growth last year, with a 1.8 percent increase for the year, showing that it’s in better shape than most of its peers.
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Post by valpomike on Sept 4, 2010 17:03:15 GMT 1
That could be becasue, Poland tries harder. Keep up the good work. You all know how I fell for Poland.
Mike
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Post by tufta on Sept 5, 2010 8:46:16 GMT 1
That could be becasue, Poland tries harder. Keep up the good work. You all know how I fell for Poland. Mike Yes, in part because Poles still have the drive to improve. Read this report about economy in EU including Poland and use the interactive chart to learn that the situatuion is not rosy but promising for all of us here. Let's hope Germany will keep the rising trend which it showed in lats 3 months, this will make also Poland economic rise even easier, as well as the rest of Europe. So keep your finhers crossed for the Germans Mike, ok? |
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Post by tufta on Sept 5, 2010 8:46:57 GMT 1
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Post by Bonobo on Sept 5, 2010 21:24:13 GMT 1
the situatuion is not rosy but promising for all of us here. E.g., deficit is huge and growing....
Poland plans to cut deficit by 20 percent in 2011
04.09.2010 07:45
Poland’s government agreed on a central budget deficit of 40.2 billion zloty for 2011, Friday evening, as next year’s budget was formally adopted by the Civic Platform/Polish Peasant’s Party coalition.
The 2011 budget draft will now go for consultation with the Tripartite Commission for Socio-Economic Issues before being put before parliament, said the government information centre.
Jolanta Fedak, the minister of labour and social policy confirmed that the draft budget for 2011 proposes a deficit of 40.2 billion zloty (10 billion euro) down from 48 billion zloty in 2010.
Sources at the Ministry of Finance say next year's planned privatization revenues at 15 billion zloty.
GDP growth is projected to reach 3.5 percent with inflation averaging 2.3 percent.
Prime Minister Donald Tusk is also asking ministers to seek savings in each department in an attempt to being down public spending. A proposed one percent rise in VAT will also be out before MPs later this autumn, a measure opposition politicians say they will oppose.
Tufta, it hurts Mike`s and my Polish dignity to depend on Germans so much. What can we do to reverse the trend so that Germans depend on us?  |
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Post by tufta on Sept 6, 2010 8:33:18 GMT 1
Tufta, it hurts Mike`s and my Polish dignity to depend on Germans so much. What can we do to reverse the trend so that Germans depend on us? I am sure you are deeply hurt! ;D ;D ;D ;D You mean what can we do to become even more dependent on foreign markets buying our goods? Export more! |
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Post by valpomike on Sept 6, 2010 16:55:43 GMT 1
They, along with the world, will depend on Poland more, in time to come. Poland, will again, lead the world, with there great working people.
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Post by Bonobo on Sept 7, 2010 20:48:49 GMT 1
Tightening the belt has already started....
Polish Government Increases VAT Rates
Marek Oktawian Bulanowski | 6th September 2010
The Polish government adopted a Multi-Year Financial Plan last month in an attempt to rescue the budget deficit. Civic Platform (PO), which has a majority in coalition with the Polish Peasants’ Party in the Parliament, wishes to increase the basic VAT rates to five, eight and 23 percent. This means that the basic VAT rate, currently 22 percent, is to grow by one percent starting from next year, exceeding the EU average. VAT for unprocessed food will change from three to five percent, for processed food it will decrease from seven to five percent, and it will increase up to eight percent for construction products, pharmaceuticals and some media, according to Minister of Finance Jacek Rostowski.
Prime Minister Donald Tusk stated that this necessary step will be accompanied by dozens of legal acts to be passed by the Polish Parliament in autumn, including cuts on expenditure for the administration and abolishing regulatory restrictions for businesses. The essential element of the plan is the obligatory decrease in public expenditure. The budget deficit is to be reduced to 45 billion złoty next year, 40 billion in 2012, and to 30 billion by 2013, when the total budget deficit shall not exceed three percent of GNP.
Millions of people have been affected by the global crisis, and other European governments have responded with cuts on investments expenditure, salaries, pensions and other social benefits. In other European countries, the current situation is partly a result of the use of public money to save failing businesses. Poland has avoided such steps, and its current situation is better, Donald Tusk explained when defending his plan in Parliament.
Jacek Rostowski remarked that a decrease in taxation in 2006/07 resulted in the fall of budget income by 40 billion złoty this year. The decision was right then, but, according to him, the necessary further reforms were not undertaken, and the reforms of public finances will have to be accompanied by cuts in public spending in the forthcoming years.
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Post by tufta on Sept 9, 2010 6:32:39 GMT 1
Tightening the belt has already started.... Polish Government Increases VAT Rates
Marek Oktawian Bulanowski | 6th September 2010
The Polish government adopted a Multi-Year Financial Plan last month in an attempt to rescue the budget deficit. I am afraid this is just a short range attempt, and not a general cure. Which is a shame. And government is sleeping over a chance to reform the finanance, cut the growing deficit while the economy is growing.... Poland’s economic mad men might be right
September 6, 2010 3:49pm
By Krzysztof Rybinski
Here is the official story: Poland was the only country in the EU to survive the 2009 crisis without falling into recession; is posting further solid growth in 2010 and will see an expansion of nearly 5 per cent next year. Unlike other European states, the country has absolutely no need to embark on painful economic reforms.
Here is the story as told by those Polish economists that Donald Tusk, the Polish prime minister, has called the ‘mad people’. Public spending is growing, and so is public borrowing, with a fiscal deficit close to 8 per cent of GDP expected for this year, topping last year’s 7 per cent. The reform of public finance has stalled since 2008; energy shortages loom; infrastructure is creaking and entrepreneurs are drowning in bureaucratic red tape.
I am one of the ‘mad people’. And I am worried that we are right. Poland avoided recession in 2009 partly because of pure luck. In the absence of reforms we will need much more luck in the coming years to avoid public finance turbulence.
The government predicts that by 2012 GDP growth will reach almost 5 per cent - having accelerated to 3.5 per cent in the second quarter of this year from 1.9 per cent last year. Polish public debt is projected to stabilize at 54.99 per cent of GDP (conveniently just below the 55 per cent legal threshold), amid moderate tax increases, innovative spending rules and a huge privatization programme.
If you deduct the cost of pension reform from the public debt - as ministers like to do on the grounds that no country should be punished for doing reforms - it falls below 45 per cent, one of the EU’s lowest levels. Basking in a stable popularity rating of close to 50 percent, the government says others should learn from Warsaw how to skilfully manage an economy during tough times.
The ‘mad people’ take a different view. These fools, who include prominent economists, former ministers and ex-central bank governments, point out that between 2008 and 2010 the ratio of public spending to GDP went up from 42 per cent to 47 per cent. Part of the increase was due to an EU funds driven investment surge, but part was due to a continued increase in social spending. In 2009 alone public spending in Poland rose by 10 per cent - or more than 6 per cent in real terms, pushing up deficits.
The government is basing its policy on a very optimistic growth path. If for any reason - such as another global slowdown - growth falls short of expectations, public debt will likely top 55 per cent in 2011 or 2012 at the latest, and will exceed 60 per cent soon after, breaching a constitutional limit. One may resort to creative calculation and deduct pension reform costs from the public debt, but bonds have to be rolled over no matter whether they are owned by hedge funds or domestic pension funds.
Meanwhile, energy companies are ringing alarm bells that Poland will face power shortages starting from 2012 due to ageing infrastructure and limited investment. Poland remains the most over-regulated OECD economy and has dropped 20 places in the World Bank’s Doing Business ranking between 2005 and 2010. Poland occupies the tail position in the EU’s innovation ranking. The employment ratio is one of the lowest in Europe; the effective pension age is 59 years, also one of Europe’s lowest. Soldiers and police officers can retire before they turn 40.
In a 34-page statement when taking office in 2008, Tusk made 197 promises, including pledges to lower taxes, reduce the fiscal deficit and slash the public debt. Instead, the deficit, debt and taxes are on a steep rise.
Structural reforms are necessary. However, no such reforms are planned for 2010-2011, although markets are betting that the government’s reformist agenda will surface after elections in 2012.
Krzysztof Rybinski is a professor at the Warsaw School of Economics and a former deputy governor of the National Bank of Poland |
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Post by pjotr on Sept 9, 2010 12:07:58 GMT 1
Tufta, it hurts Mike`s and my Polish dignity to depend on Germans so much. What can we do to reverse the trend so that Germans depend on us? I am sure you are deeply hurt! ;D ;D ;D ;D You mean what can we do to become even more dependent on foreign markets buying our goods? Export more! Tufta, Fortunately Poland has a large innermarket and a Central-European market, and the European continent as a whole nearby. Russia is also an export market. The benefit of Poland is that it is a large country with a lot of cities, towns, regions and so the internal trade and commerical activity can be selfsuficiant. Poland benefits from both export and import business, because the country is also a transfer route and a bridge between Russia and Germany and between Scaninavia (Finland, Sweden, Norway and Southern-Europe). And don't coun't out the Modern Baltic states, who are now in a recession, but who might do good in the near future and could be good small trade partners for Poland. Next to export and import, production and the financial sector Poland will also have new sectors of growth like the Tourist industry, Food processing industry and the improvement or growth of it's chemical industry, car industry and machinery. Like you said before Tufta, innovation and so Research and Development (R&D) are very important for Polands economy, to maintain the good position and shape the Polish economy is in right now. Therefor the Polish government has to keep investing in Polish education and to reform it. Pieter |
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Post by tufta on Sept 9, 2010 16:53:58 GMT 1
innovation and so Research and Development (R&D) are very important for Polands economy, to maintain the good position and shape the Polish economy is in right now. Therefor the Polish government has to keep investing in Polish education and to reform it. Pieter It has to but it doesn't, although at least it has given signs that alarming voices have been heard  Take a look here, please
Maths exam needed to improve Poland's economy, says gov't advisor
9th September 2010
The members of a panel on research and development at the Economic Forum in Krynica agreed that although Poland's economy is doing well, the country is lagging behind when it comes to innovation.
According to the head of the Prime Minister's advisory team, Michał Boni, who presented a couple of ideas on how to improve innovation, Poland needs, first of all, to change its education system by restoring a mathematics exam at the final examination in high schools. He also pointed out that
Poland must increase its R&D investment by 0.6 percent of GDP.
"We spend little [on innovation] and the current innovation funds are not structured well," Mr Boni said, explaining that, contrary to Poland, in developed countries the state contributes one third of innovation funds, while the rest comes from private businesses.
Other aspects that need to be improved, according to Mr Boni are: cooperation between businesses and research centers, as well as more foreign investment in research and development.
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Post by pjotr on Sept 9, 2010 23:17:10 GMT 1
innovation and so Research and Development (R&D) are very important for Polands economy, to maintain the good position and shape the Polish economy is in right now. Therefor the Polish government has to keep investing in Polish education and to reform it. Pieter It has to but it doesn't, although at least it has given signs that alarming voices have been heard Take a look here, please
Maths exam needed to improve Poland's economy, says gov't advisor
9th September 2010
The members of a panel on research and development at the Economic Forum in Krynica agreed that although Poland's economy is doing well, the country is lagging behind when it comes to innovation.
According to the head of the Prime Minister's advisory team, Michał Boni, who presented a couple of ideas on how to improve innovation, Poland needs, first of all, to change its education system by restoring a mathematics exam at the final examination in high schools. He also pointed out that
Poland must increase its R&D investment by 0.6 percent of GDP.
"We spend little [on innovation] and the current innovation funds are not structured well," Mr Boni said, explaining that, contrary to Poland, in developed countries the state contributes one third of innovation funds, while the rest comes from private businesses.
Other aspects that need to be improved, according to Mr Boni are: cooperation between businesses and research centers, as well as more foreign investment in research and development.
So they know what they have to do Tufta. The economy is going well now, but if they do not invest enough in innovation and therefor in R & D the future will show a less prosperous Poland. For a healthy and new economy you need Human capital. The future human capital are the kids who are in Polish primary schools now, pupils of Polish high schools and students at Polish universities, technical and economical colleges. You need inventive future scientists, technicians, innovative entrepreneurs, researchers, developpers, * ICT people, people who invent new things that weren't there before. The scientific and technological inventions, progress and developments of today go with a tremendous speed, in a dynamic time in history. The Modern global Capitalism and market economy doesn't wait for slow or lazy countries or societies. You have to be top of the bill, the best, compete with other countries and peoples. Companies, businessmen, traders and investers look for countries with a attractive investmentclimate (low taxes, good infrastructure, good legislation, lawinforcement, no corruption, a good political climate - a Free democracy which supports a healthy economy, innovations, progress and economical development). Some countries in Western-Europe lost the momentum and suffered from economical decline, unemployment, foreign companies which close branches and leave that particular countries and domestic companies which went bankrupt. The societies which addapt themselves to the new changing situation, with new realities, new technologies, new trends, new products and new developments could coap with economical setbacks, the recession and crisis, because they had invested in hard times, can reform themselves and make tough (sometines) painful decisions for their people and economies. For instance to cut down costs, spend less, reorganise, close unprofitable companies or institutions. But a reemerging state as Poland can't cut back on education and R&D. Investing in better, and a modernised education system costs Poland some money, but will deliver a lot more money than that back to Poland in the near future, when Polish engineers and researchers develop new Polish products, which will be produced by Polish industries, sold and transported by Polish firms and companies, and marketed and traded by Polish businessmen and managers. Poland is an intellectual centre of Europe with it's many cities and universities in that. Next to these universities there are institutions and research centres where R&D takes place. It's to less now. So a task for the Polish government and Polish politicians (Parlaimentarians) is to demand and increase of the spending on R&D. Pieter *ICT = Information Communication Technology |
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Post by tufta on Sept 10, 2010 8:39:53 GMT 1
Very much exactly so, Pieter! But this Investing in better, and a modernised education system costs Poland some money, but will deliver a lot more money than that back to Poland in the near future, is too difficult to undestand for any Polish politician since the great change of 1989. The present authorities are from yet another party I voted for thinking they will mend the FUTURE of Poland not just the presence, but they fail badly. Even if they are still better than the alternative PiS which aims at mending the past  ;D |
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Post by pjotr on Sept 10, 2010 15:28:42 GMT 1
Is too difficult to undestand for any Polish politician since the great change of 1989. The present authorities are from yet another party I voted for thinking they will mend the FUTURE of Poland not just the presence, but they fail badly. Even if they are still better than the alternative PiS which aims at mending the past ;D I don't know Tufta, because I don't know the Polish situation on the ground excactly, but I do believe you when you say this, because you live and work in Poland, vote in Poland and know the Polish poltical and economical situation very well. You are able to monitor the situation closely. And I hope that you and other people like you can put some pressure on the government, on the politicians about this important subject. I am curious what Bonobo's opinion is about this, since he is a teacher in the Krakow region and knows something about the Polish education system, because he teaches Polish teenagers at a Polish highschool. Pieter |
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Post by tufta on Sept 10, 2010 20:08:10 GMT 1
Let me say I ment the general reform and increased funding of all the education-research-R&D 'department'. Including the private own companies, who should haev special offers of reducing taxes if they develop a R&D department. etc.
Another point which I miss is lack of financial promotion of multi-kid families, the way it is in France for instance.
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Post by Bonobo on Sept 27, 2010 21:47:27 GMT 1
Another point which I miss is lack of financial promotion of multi-kid families, the way it is in France for instance. And what is the French model exactly? |
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Post by tufta on Sept 28, 2010 7:51:05 GMT 1
Another point which I miss is lack of financial promotion of multi-kid families, the way it is in France for instance. And what is the French model exactly? Allowances families get for each kid. For holidays, school, books etc. Long, fully paid maternal (or paternal) leave. But most of all a tax system - with each child you pay less taxes, with four you wouldn't pay at all! In total you would be now payed by the state not the other way round. |
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Post by pjotr on Sept 28, 2010 8:48:10 GMT 1
Tufta,
The problem in my country and other Western European countries is that migrant families use the financial multi-kid promotion system, called 'Kinderbijslag' (Child benefit) in Dutch, while the Dutch families don't because they have very small families of 1 or 2 kids, while migrants often have 4, 5 or more children. That's okay from a personal ambition and family plannning perspective of these people, but bad for the demographic development from a European, Dutch perspective.
But, yes, with the development of less young people and more old people, and less people in general, the situation could be dramatic for the future. For the economy, the labour market, the pensions of future pensioners, the situation of a people as a whole, and for the future of many branches of the society. From a human, material, sociographical (social balance or stability), financial, evolutionairy, educational, religious, secular, democratic point of view. Because imagine a society only of elders or dominated by old people. First of all the democracy will fall in decline, because a lot of people will not vote. A small group of healthy young and older people who are stil fit will vote and so there is that chance of on sided policies and the power of people who want to go one direction only. The variety in a society is lost and the natural human reproduction comes to a stand still. Some people in our Western societies want controled and practical immigration. That means, only desirable, useful migrants may come in. People who are educated, skilled, who learned the language of their new country abroad in the places they came from. Let's say the Indian computer experts who come to Germany to work in the computer industry, or the very bright (the brightest of the brightest) of the Asians (from Japan, China, Vietnam and South-Korea) who study and often work in Western universities and become doctors, nurses, scientists or entrepreneurs in our countries. They are welcome and not complained about. The differance is with the migrants of other countries (Turkey, Morocco and other Muslim countries) who do not add quality and progress to the labourmarket, but join the army of unemployed social benefit people that already exist in Western-European countries. Tufta, in Poland thank god that problem does not exist yet, and you do not have a migration and European (white) underclass problem as we have.
The problem I wanted to explain was and is the fact that often unproductive and people who cost money instaid of delivering their contribution to society receive financial promotion of multi-kid families. In the Netherlands, France and Germany this system of Child benefit got way out of hand. And therefor I am not a supporter of that.
Pieter
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Post by tufta on Sept 28, 2010 10:44:02 GMT 1
In the Netherlands, France and Germany this system of Child benefit got way out of hand. And therefor I am not a supporter of that. Pieter Pieter, would you support this system in Poland, given her situation? |
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Post by pjotr on Sept 28, 2010 14:01:57 GMT 1
In the Netherlands, France and Germany this system of Child benefit got way out of hand. And therefor I am not a supporter of that. Pieter Pieter, would you support this system in Poland, given her situation? Tufta, Maybe in Poland, because the vast majority is ethnic Polish and Roman-catholic. This sounds discriminatory, but I think the ' Kinderbijslag' ( Child benefit) is only benefitial if it is for people whofeel connected to the nation they are in and loyal towardse their nation. Polish families are productive for Poland if they stay in Poland, study there, work there and are part of village, town or city communities of Poles in Poland. Pieter |
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Post by tufta on Sept 28, 2010 20:40:17 GMT 1
Leszek Balcerowicz has set up a Polish debt clock in the city centre. A marvellous idea how to elegantly exert pressure on the government to at last fix the problem Here's internet version of the clock www.zegardlugu.pl/ |
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Post by tufta on Sept 28, 2010 20:43:44 GMT 1
The government has alredy reacted to the pressure ;D ;D , and informed the media ...in an informal way, that the date it assumes Poland economy will benefit from joining the Eurozone is around 2015. Quite correct assumption I must say!
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Post by Bonobo on Sept 28, 2010 20:56:58 GMT 1
Allowances families get for each kid. For holidays, school, books etc. Long, fully paid maternal (or paternal) leave. But most of all a tax system - with each child you pay less taxes, with four you wouldn't pay at all! In total you would be now payed by the state not the other way round. The French have the Eiffel Tower so they can afford such a system We currently have only the Palace of Culture so we can`t afford it. Simple. |
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Post by tufta on Oct 6, 2010 6:46:20 GMT 1
The French have the Eiffel Tower so they can afford such a system We currently have only the Palace of Culture so we can`t afford it. Simple. Good point! |
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Post by tufta on Oct 6, 2010 6:51:49 GMT 1
"Poland makes leaps in competitiveness  Poland has overtaken large southern European economies in terms of competitiveness. According to the recently published World Economic Forum Global Competitiveness Index, Poland has overtaken Spain, Greece and Italy, advancing to 39th place in the world from 46th last year. Why such a big leap? Experts quoted by the daily point to several factors: a rapidly growing domestic market, flexible labour regulations and a healthy banking system. The most competitive EU countries are Sweden (2nd place in the ranking) followed by Germany (5), Finland (7), Netherlands (8) and Denmark (9)." The closer Poland gets to large northern European economies the sooner the time will come for "Farewell to the zloty “Polish government is secretly preparing for the euro”, headlines Dziennik Gazeta Prawna.  Although no official date has been set yet for the adoption of the common currency, a National Euro Strategic Framework has already been established with a schedule of activities including “legal acts required to replace the zloty with the euro, the necessary changes to IT networks and creation of a price-monitoring system”. According to ministers’ unofficial comments, the operation could be carried out in 2015. However, Warsaw prefers to play it safe and not disclose the planned date after the experience of 2008, when PM Tusk engaged for a 2011 switchover but subsequently had to backtrack on the pledge. " |
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Post by pjotr on Oct 6, 2010 7:10:54 GMT 1
"Poland makes leaps in competitiveness Poland has overtaken large southern European economies in terms of competitiveness. According to the recently published World Economic Forum Global Competitiveness Index, Poland has overtaken Spain, Greece and Italy, advancing to 39th place in the world from 46th last year. Why such a big leap? Experts quoted by the daily point to several factors: a rapidly growing domestic market, flexible labour regulations and a healthy banking system. The most competitive EU countries are Sweden (2nd place in the ranking) followed by Germany (5), Finland (7), Netherlands (8) and Denmark (9)." The closer Poland gets to large northern European economies the sooner the time will come for "Farewell to the zloty “Polish government is secretly preparing for the euro”, headlines Dziennik Gazeta Prawna. Although no official date has been set yet for the adoption of the common currency, a National Euro Strategic Framework has already been established with a schedule of activities including “legal acts required to replace the zloty with the euro, the necessary changes to IT networks and creation of a price-monitoring system”. According to ministers’ unofficial comments, the operation could be carried out in 2015. However, Warsaw prefers to play it safe and not disclose the planned date after the experience of 2008, when PM Tusk engaged for a 2011 switchover but subsequently had to backtrack on the pledge. " Tufta, Don't go to quick to the Euro, Poland is doing fine now with it's own currancy the Zloty. Look at Slowakia.  Slovakia joins euro and hopes it will bring securityPublished: Thursday, January 1, 2009BRATISLAVA, Slovakia — Slovakia joined the euro on Thursday, hoping that membership of the currency will soften the blow of the global financial crisis and bring about greater economic convergence with richer European Union partners. Slovakia left behind other, bigger Central European nations - Poland, Hungary and the Czech Republic - and is likely to be the region's last euro entrant for some time given the present financial turmoil. " Especially at the time of a financial crisis, it is visible that small currencies are not able to withstand pressures on the markets," the finance minister Jan Pociatek said. Like the EU's other eastern capitals, Bratislava has traded drab communist-era facades for flashy restaurants and high-end boutiques since joining the EU in 2004. But Slovakia's 5.4 million people will be the poorest in the euro club, with gross domestic product per capita at 71 percent of the EU's average. Many Slovaks, however, see the single currency as a source of pride, hoping it will bring economic growth and help the country catch up with the older EU states. " It's beautiful, I feel even more European now," said Ivan Decman, 27, celebrating in Bratislava under fireworks and euro signs displayed on large TV screens. Joining the euro has capped a decade of transformation for Slovakia from central European laggard to an EU growth leader. Its economy expanded 10.4 percent last year. Next year, the government sees growth exceeding 4 percent despite recession in big euro-zone states like Germany. The fast economic growth, stimulated by the reforms of the previous center-right government, has helped the leftist Prime Minister Robert Fico cut the budget deficit while lifting welfare spending. Slovakia has also avoided major damage from the financial crisis, although its $100 billion economy will be hit by weaker demand for the cars and TVs produced at scores of new factories set up by foreign firms in a decade of booming investment. Slovaks had long feared that the euro would mean higher prices for goods and services, as seen in previous newcomers, such as Slovenia in 2007. Opinion polls show Slovaks still worry about a spike in prices, but they have become more enthusiastic about the single currency since the financial crisis rocked their emerging markets neighbors. The currency, the crown, is the only unit in the region that has not weakened against the euro since its exchange rate was locked in at 30.126 against the single currency in July. In comparison, Poland's zloty lost 30 percent against the euro over that period and Hungary's forint 15 percent. The Czech crown is down 12 percent. The central bank said the banking system was converting to euros with no problem, and that 96 percent of the ATMs in Slovakia were ready to issue euro notes on Thursday afternoon. In Bratislava on Thursday, many people were still paying for goods with Slovak crowns, in use until Jan. 16, but shops and restaurants appeared to have switched to the new currency without problem. " People are paying in euros, cash or credit cards, we have had no problems with that," said Evka Nemethova, a waitress at a restaurant in the center of Bratislava. The crown's demise caused some mourning, but hopes of protection against financial turmoil were high. " We are losing part of us, part of our identity," Fico said shortly before he withdrew €100 from an ATM at Parliament. " But, in the world of an economic crisis, the euro is boosting the self-confidence of the Slovak people." |
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Post by pjotr on Oct 6, 2010 7:15:50 GMT 1
 Source:Slovak Premier Slams Euro BailoutsBy LEOS ROUSEK BRATISLAVA, Slovakia—The prime minister of Slovakia, the newest member of the euro zone, said overly indebted countries should be forced into bankruptcy, not bailed out, in a sign of the tensions roiling the European currency bloc in the wake of the Greek crisis. Slovak Prime Minister Iveta Radicova Wednesday called for allowing euro area indebted countries to default rather than throwing them new credit lifelines. Last month, Slovakia refused to be part of a EUR110 billion E.U. bailout for Greece. Iveta Radicova, who heads the right-leaning coalition government here, also said the so-called stability fund set up this year in case other European countries need financial rescue, is likely to cause more problems than it will solve. Governments need "a value system based on responsibility" to insure "the further existence of the euro," Ms. Radicova said in an interview Wednesday with The Wall Street Journal. Slovakia has refused to contribute to the €110 billion ($139.4 billion) bailout of Greece, the only member of the 16-nation euro zone to do so, and only grudgingly approved the creation of the €750 billion European Financial Stability Facility. Slovakia's stance has caused consternation among European Union officials in Brussels, at the European Central Bank and in other European capitals, where a willingness to rescue troubled euro-zone states is viewed as critical to financial stability.  Slovak Prime Minister Iveta Radicov, shown in the Bellevue Palace in Berlin, said that the so-called stability fund is likely to cause more problems than it will solve.Olli Rehn, the top European Commission official in charge of economic and monetary affairs, issued an unusually blunt statement last month, saying: " I can only regret this breach of solidarity within the euro area." Ms. Radicova, elected in June after promising to cut her country's budget deficit, rejects such criticism. She and other Slovak officials say countries using the euro have a duty to police their own finances and not become a burden to others by taking on too much debt. Slovakia, a country of 5 million people, is the poorest country using the euro. Center-right Slovak politicians see no reason their country's taxpayers should have to rescue richer, and more profligate, nations. Some analysts say it is in part because Slovakia is less developed and less integrated with the rest of the euro zone that its politicians adopt a tough line on bailouts. German and French leaders, whose countries' banks have lent heavily to Greece and other troubled southern European economies, have felt pressured to act to protect their own national financial systems. Slovak banks don't have large international loan portfolios. Lars Christensen, chief economist at Danskebank in Copenhagen, said Ms. Radicova " gives voice" to concerns shared by less outspoken leaders in Scandinavia, the Netherlands and elsewhere " who have long been frustrated with irresponsible fiscal policy in some EU countries." Ms. Radicova on Wednesday said the EU needs to overhaul its institutions, including its statistics agency and market-oversight bodies, so it can prevent crises like the one that enveloped Greece. She said European authorities and bond-rating agencies who failed to properly monitor the situation in Greece, and banks that didn't follow appropriate rules for risk management, share responsibility for the Greek situation. " We would like to see really crucial changes in the behavior of these responsible institutions to have once more trust that this moral hazard will not repeat," Ms. Radicova said. She said the euro zone needs to create " an orderly bankruptcy process" for nations that default on debts, so that Europe's frugal states won't again have to foot the bill for rescuing spendthrift neighbors. Slovakia's government has pledged to cut spending and raise the sales tax on some goods and services to shrink the government budget deficit to less than 3% of gross domestic product by 2013. Slovakia's deficit this year is expected to be about 8% of GDP. |
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Post by pjotr on Oct 6, 2010 7:25:40 GMT 1
 De-railing Slovakia's economy20.05.2010 / 05:00 CET
Add Slovakia to the PIGS list.The media across Europe, European Voice of course included, has covered the eurozone debt crisis extensively. Increasingly too they and you are turning the focus to the PIGS – Portugal, Italy and Spain as well as Greece. No foreign media are, however, writing about the state of Slovakia's finances. They should, because, while Slovakia looks safe, it is rapidly becoming like Greece. In the year running up to its adoption of the euro on 1 January 2009, Slovakia's public debt was a splendid 28% of its gross domestic product (GDP) and its budget deficit was well below 3%. The figures have worsened – official data suggest that Slovakia's debt will reach 41% of GDP this year – but are still very good by EU standards. Where, then, is the problem? The problem is the government's use of public-private partnerships (PPPs). Immediately after adopting the euro, the government embarked on a politically attractive, but very costly road-construction programme through PPPs. The three PPP highways will cost more than €8 billion. That is a lot of money for a small economy. Accounting for PPPs is tricky, practices vary and rules change. How much of the funds involved in PPPs should appear as public debt? In reality, though, all the risks of these PPP projects are being borne by the Slovak government, as, at the request of its private partners, it will guarantee repayment. If the costs of the PPPs were reflected in full, Slovakia's real public debt would amount to over 51% of GDP in 2010 – an increase of 80% since the euro's adoption and 10% higher than reported by the government. The country's budget deficit has grown even faster. It was 2.2% of GDP in 2008, grew to 6.3% of GDP in 2009 and, according to the approved national budget, should reach 5.5% of GDP (€3.75bn) in 2010. By other countries' recent standards, this is still modest. But if the costs of PPP highways are added to these official figures, the result is shocking. The two PPPs due in 2010 will cost more than €6bn, around 8% of GDP. That takes the real deficit to around 15%. This is worse than Greece's or the UK's. This is a problem for Europe. But it is a problem that the EU is ignoring. The European Central Bank monitored Slovakia's convergence with the Maastricht treaty criteria before it joined the euro, but it is not its responsibility to warn against this PPP-induced divergence from the terms of the stability and growth pact. This is a blind spot. There are others. The European Commission has reservations about the projects' impact – but on the environment, not its finances. The European Investment Bank (EIB), meanwhile, is expected to announce next week that it will lend €1bn loan to finance the PPP highways. The EIB's role is crucial, not just because of the size of its loan, but also because private banks would not take the risk of financing PPP highways without the EIB's involvement. The EIB's criteria are project-based. But the EIB's objectives, as stated on its website, also include furthering “the objectives of the European Union by making long-term finance available for sound investment”. Is it “sound” to support an investment that will take the budget deficit to 13% of GDP? In recent weeks, EU member states have voiced and shown their concern about the inadequacies of economic governance in the eurozone. How PPPs are accounted for is a topic to which they should turn their attention and oblige EU institutions to factor in. The rapid deterioration in Slovakia's real public finances should show how dangerous this blind spot is. From: Juraj Mesik Bratislava Comment Pjotr: I can't find any info to back my thesis, but I know the Slowak economy wasn't doing well and that the quick enter of the Euro zone in a time of crisis was not a smart step. When your currancy is to strong then your export products become to expensive. In more stabile times it is more profitable to join the Euro, in bad times the Euro is bad for trade, economical growth and etc. Poland grows without having the Euro. When the crisis is over it is a better time to join the Euro. This is just my subjective (Dutch colored) view. Pjotr |
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Post by tufta on Oct 6, 2010 14:47:07 GMT 1
I can't find any info to back my thesis, but I know the Slowak economy wasn't doing well and that the quick enter of the Euro zone in a time of crisis was not a smart step. When your currancy is to strong then your export products become to expensive. In more stabile times it is more profitable to join the Euro, in bad times the Euro is bad for trade, economical growth and etc. Poland grows without having the Euro. When the crisis is over it is a better time to join the Euro. This is just my subjective (Dutch colored) view. Pjotr Slovakia lagged behind Poland-Czechia-Hungary very much in the nineties when the country was ruled by a really silly guy Meciar. Then to power came Mikulas Dziurinda, West-oriented, liberal minded, who quickly oriented Slovakia to the EU and intruduced far-reaching pro-market reforms plus privatisation. Unfortunately he was later involved in corruption scandals and left. In the meantime Slovakia made a grave mistake - they have offered very special discounts for car manufacturers and in result their economy is almost a monoculture today. A really huge chunk of their GDP is from car assembly factories. This one point in times of economical crisis when people don;t buy new cars was enough to cause problems for Slovakian economy. But they have added another blow and applied for Eurozone membership too early at the point when they are not able to compete with the leading economies of Eurozone but by cheaper labour costs. The reasons for appling to eurozone was purely political, they wanted to make sure nothing like East-looking Meciar will never happen to them again. The situation in Poland is different and no political party wants to join Euro 'ASAP". But we cannot afford not to use this tool of accelerating economical growth in the future. It is estimated that the Euro, when introduced at the correct moment will give us additional GDP increase of around 1.5 - 2.5 % for around 10 years. But we have to be able to compete on equal terms with the largest and most productive economies of EU first. Otherwise we would economically (and then politically) become a shade country of the largest. This is certainly not Poland's will |
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Post by Bonobo on Oct 6, 2010 23:18:57 GMT 1
This is a problem for Europe. Exactly. Unfortunately. They have undertaken some steps in Europe, though. Most Polish economic experts agree with you. |
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;D