Dr Michał Możdżeń: government belt tightening would lower GDP growth

Public debt in Poland is rising largely because households and firms are saving more, says Michał Możdżeń of the Krakow University of Economics. When private savings increase faster than investment, the government’s deficit grows almost mechanically. Lower inflows of foreign savings have reinforced this trend.

He argues deficits reflect broader macro forces, not just policy choices. If the government cuts spending, growth would likely slow and unemployment could rise, as demand weakens.

There are alternatives. Reducing reliance on imports or redistributing income away from top earners could lower savings and sustain demand.

Overall, fiscal policy should focus less on debt levels and more on avoiding imbalances such as inflation, external deficits, and rising inequality, which he sees as a growing risk.

(pb.pl)