Private Employers Confederation fears interest rate hikes may kill growth

According to the Polish Confederation of Private Employers (PKPP) the economic recovery and optimism among businesses remains strong. However, the organization fears that it may be difficult to sustain as high interest rates may cool investment demand. The PKPP points to the recent notable increase in inflation, which they see as a problem which cannot be tackled along with curing high unemployment and the budget deficit. Meanwhile, economists from the Center for Social and Economic Research (CASE) disagree. "Those businesses who are going to invest will do so anyway. An increase in interest rates of the magnitude we are anticipating would not cause a drop in investment demand," said Katarzyna Piętka from CASE. However, the Center is quite pessimistic about future growth prospects, and forecasts 2005 GDP growth at 4.1%. (Puls Biznesu, p. 7) T.J.