Editor's Note: A record week in the Polish economy
We are used to grumbling and complaining about the state of the Polish economy. But surprise, surprise in the past week the WIG index of the Warsaw Stock Exchange has reached its highest level ever in the 14-year history of the bourse. What's more, the country's largest companies, such as PKO BP, PZU, PKN Orlen and KGHM Polska Miedź, which in the past week all announced their financial reports for 2004, have made their biggest profits in the history of our free market economy.
How has it happened that in the past week we have witnessed such a spectacular series of economic incidents?
Economists agree on one thing-Polish companies have successfully survived the stagnation period that befell our economy in the years 2001-2002. To stay on the market they were cutting costs and reducing workforces. However, last year, when the economy finally roused from its slumber, Polish companies took advantage of the prosperity and favorable macroeconomic conditions.
But there are two sides to every story. It will be very hard to sustain the profits at such a high level, especially when we consider the fact that the market will be more difficult than last year. Because of the strong złoty, conditions are not favorable for Polish exporters-and demand on the local market is still low.
Moreover, entrepreneurs are still reluctant to invest the money that they make, which means that the record-high profits aren't reflected in either an investment boom, or in the creation of new jobs.
The reason? Entrepreneurs, especially those heading small- and medium-sized concerns, are wasting their time and energy weaving through vague regulations, complying with complex tax laws, and battling reams of red tape associated with the high costs of hiring employees.
So it is possible that this past week will go down in the annals of the Polish economy as an historic one.
That is unless some miracle occurs and Polish politicians remove a few of the hurdles that they have been setting up for the past few years.
Eliza Durka
Editor-in-chief
How has it happened that in the past week we have witnessed such a spectacular series of economic incidents?
Economists agree on one thing-Polish companies have successfully survived the stagnation period that befell our economy in the years 2001-2002. To stay on the market they were cutting costs and reducing workforces. However, last year, when the economy finally roused from its slumber, Polish companies took advantage of the prosperity and favorable macroeconomic conditions.
But there are two sides to every story. It will be very hard to sustain the profits at such a high level, especially when we consider the fact that the market will be more difficult than last year. Because of the strong złoty, conditions are not favorable for Polish exporters-and demand on the local market is still low.
Moreover, entrepreneurs are still reluctant to invest the money that they make, which means that the record-high profits aren't reflected in either an investment boom, or in the creation of new jobs.
The reason? Entrepreneurs, especially those heading small- and medium-sized concerns, are wasting their time and energy weaving through vague regulations, complying with complex tax laws, and battling reams of red tape associated with the high costs of hiring employees.
So it is possible that this past week will go down in the annals of the Polish economy as an historic one.
That is unless some miracle occurs and Polish politicians remove a few of the hurdles that they have been setting up for the past few years.
Eliza Durka
Editor-in-chief
