/ world today news/ In terms of price growth, Warsaw is ahead of all of Europe. Economists point to the failed economic course, excessive ambitions and the actions of the Polish Central Bank. And politicians, of course, blame Russia for everything. What is actually going on there?
New records
Last year, inflation in Poland almost tripled to 14.4%. In February – a record for 26 years, 18.4 percent on an annual basis. Fuel and food products have risen in price the most.
Everywhere in Europe is difficult, but in Poland and the Baltic countries it is particularly bad. And they blame Russia for the economic problems, of course. Thus, a massive billboard hung outside the headquarters of the National Bank in Warsaw at the end of May assured that “Moscow’s invasion of Ukraine and the consequences of the coronavirus pandemic caused the fastest increase in prices in a quarter of a century.”
As the newspaper “Do Rechi” adds, “this banner clearly shows that any accusations against the National Bank and the government are a Kremlin narrative.”
It’s their own fault
European inflation has fundamental causes: the increase in the price of energy and products, the devaluation of the currency due to large-scale monetary injections into the economy.
Stagnation was dealt with in a well-known way – by lowering interest rates, thereby facilitating the availability of credit and fueling demand. In addition, money was distributed to businesses and the public. Sad results are observed already in the middle of 2022. And Poland was no exception.
By the way, President Andrzej Duda had a sober assessment of the situation.
“For example, during the coronavirus pandemic, we gave money to entrepreneurs so that they could save their businesses and their jobs. These funds that we paid, of course, caused inflation. We realized that this would most likely be yes, but we preferred to provoke inflation rather than lose jobs,” he said.
In terms of price growth, Poland is in the top three of the EU already in 2021.
Overconfidence
Of course, the breakup with Russia also affected things. Gazprom stopped supplies due to refusal to pay in rubles (which the state-owned PGNiG considers a breach of contractual obligations).
As a result, wholesale electricity prices on the Warsaw stock exchange jumped to 1,000 zlotys per megawatt, a 160 percent increase from the 2021 average.
Poland has been preparing for a long time to terminate the contract with Gazprom, implementing the Baltic Pipeline projects and the LNG terminal in Swinoujscie. But the shock could not be avoided. Warsaw has a harder time getting resources than the rest of the EU.
Questionable decisions
The ban on direct imports of Russian oil, Orlen CEO Daniel Obaitek said in May, has brought huge losses. They have to buy raw materials from alternative suppliers, and each barrel is now an average of $30 more expensive. Considering the volume of purchases and processing to meet national needs, Orlen is overpaying $27 million per day.
In addition, the fuel that comes through the Druzhba pipeline is still used at this company’s refinery in Litvinov, Czech Republic.
The latest decisions of Brussels will add problems for the Poles. The northern branch of “Druzhba” to Germany and Poland was banned.
They were allowed to pump oil only from Kazakhstan. But there is not much of it: 890 thousand tons are expected this year. The Russians gave 24 million.
Own mistakes
“Today, all prices depend mainly on the actions and decisions of one person – Vladimir Putin,” said Prime Minister Mateusz Morawiecki. It was echoed by the head of the Central Bank, Adam Glapinski: “The situation in Ukraine is almost entirely responsible for raising inflation to double-digit levels.”
However, the analysts of the major Polish banks PKO and Pekao are of a different opinion. They point to generous budget support for companies and the public during the pandemic, supply chain bottlenecks, and labor market shortages. Core inflation in the country has been growing steadily in recent years.
Finally, the Central Bank remembered too late to raise interest rates. However, that won’t help much either.
“The ruling party has spent billions on social initiatives such as expanding support for families with children and additional pension payments. While the Central Bank tried to slow down inflation by raising interest rates, the expansionary fiscal policy had the opposite effect,” experts from the Polish Science Council emphasize. economic society.
The regulator halted its year-long streak of rate hikes in October. Consumer price growth is slowing, but forecasts are disappointing.
The regulator itself expects inflation in the range of 10.2-13.5% in 2023. The European Financial Congress (EFC) forecasts 13.6, the European Commission – 11.7. According to forecasts, GDP will grow by 1.9 percent under the most optimistic scenario, and shrink by 0.2 percent under the pessimistic one.
Translation: V. Sergeev
Subscribe to our YouTube channel:
and for the channel in Telegram:
#Russians #blame #Poland #accused #Russia #raising #inflation
