Inflated worries

Poland's economy could see a growth of six percent this year, potentially driving down unemployment to a single-digit level, said Deputy Prime Minister and Economy Minister Waldemar Pawlak last week. But he added that red tape would need to be cut to ease business regulations and inflation lowered to stabilize the economy.

"Pessimistic growth forecasts [for 2008] talk about growth at five percent, but I think it could be six percent if we can remove barriers to growth," Pawlak said in an interview on TVN24.

"I hope [unemployment] will be considerably lower. And yes, it could be at a single-digit level this year," he added. In the interview Pawlak said the government would work to cut red tape in the over-regulated economy to ease day-to-day business bureaucracy.

Pawlak also conceded that as the inflationary pressures were rising and the current-account deficit widening, the booming economy was growing out of balance. He said he hoped inflation would ease throughout the year and added that he believed the Monetary Policy Council (RPP) would act to help correct the imbalance.

"I hope inflation will be lower this year, I have faith in the Monetary Policy Council," said Pawlak.

Rising food and fuel prices, coupled with strong demand, have consistently driven up inflation since August last year. According to Finance Ministry estimates, inflation in December was the highest in three years at four percent, some 1.5 percent above the target level.

In an attempt to tackle the growing inflationary pressures, the RPP hiked interest rates four times last year, bringing the central bank's main rate to five percent from a record low of four percent before the first increase in April. December's record- high inflation means it is very likely the RPP will announce a further rate hike in Q1. (Reuters)