- Inflation is not only a problem in Poland, because in other countries they also struggle with it. The problem is that in Poland it is twice as high as the average in the European Union or the United States - said professor Stanisław Gomułka, who was a guest of Automation Trader.
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According to the chief economist of the Business Center Club and one of the best specialists in the field of economics in our country, the government has a serious problem to deal with the rise in inflation, which will exceed the 20 percent barrier this year. - Economists have serious doubts as to whether monetary policy was appropriate. Public expenditures increased significantly, and as we know they were financed by the increase in debt - added professor Gomułka.
Without an idea
A former adviser to finance ministers to many Polish governments believes that in the current situation, achieving the constitutional inflation target of 2.5 percent (+/- 1) seems unattainable not only in the near term, but also in the longer term.
- Normally, when inflation starts to reach a high level, there is a reaction from the central government - continued Gomułka. - We are talking about raising interest rates, which also started in Poland, but later than in other countries and slower. The second issue is the action of the government and the Central Bank - bodies that have no idea how to reduce inflation - he added.
What can happen if the designated authorities do not work effectively? Unfortunately, there is a black scenario on the horizon, in the form of exceeding the inflation limit of over 20 percent. - At the moment, this value is in the range of 15-20 percent. This is already very high, and you have to remember that consumer inflation - The Production Price Index has already exceeded 20 percent - said the professor.
- If the prices of commodities for entrepreneurs rise, if wages rise quickly and the zloty continues to weaken, it will actually force prices to rise. This, in turn, could lead to a collapse in demand and some companies may lose out and may go bankrupt, he continued.
Conflicting interests
As it turns out, an effective fight against inflation is not entirely possible, because the interests of the Central Bank, as well as the government and the de facto party in power are not the same. - We are dealing with conflicting interests.
The behavior of foreign investors is also a problem. - Poland does not enjoy too much trust, of course in the economic sense. This in turn means that foreign investors are now expecting very high interest rates on debt. The new debt generated by the government makes it necessary to sell new securities, which are already burdened with high profitability, said Gomułka.
- Normally, in recent years the cost of debt servicing has been around PLN 30 billion. The budget for the next year, in turn, provides for an increase in this cost to over 120 billion - concluded the professor.
As you can see, the outlook for the near future is not particularly optimistic. Moreover, Poland is currently entering a very long election period, during which politicians will not be willing to make unpopular decisions among the public.
