Slow growth, unemployment prompt gov't to mend ways
By : Jeffrey Sparshott
Slowing economic growth and rising unemployment are pushing the government to speed up restructuring, privatization and reforms in the public finance and labor sectors, Economy Minister Jaroslaw Bauc said last week.
"Our efforts to stabilize the economy, to liberalize and efforts regarding structural changes have been well rewarded," Bauc said at a British-Polish Chamber of Commerce meeting. "But now we have reached a new stage of development that has revealed new barriers and new challenges."
Bauc's talk came a day after a Central Statistical Office (GUS) announcement that gross domestic product (GDP) grew 4.1% in 2000, reflecting a fourth-quarter drop to 2.4% from 6% seen in the first quarter of last year.
"We have grounds to expect that 2000-2001 is probably the bottom of the lowering of growth in Poland," said Daruisz Filar, chief economist at Pekao bank. "The decrease (in growth) was very visible in the second half of 2000, but the data that we have for January and February shows some stabilization."
The unemployment picture is less optimistic, however, as government figures show that 351,000 more Poles became jobless in February, lifting the unemployment rate to 15.8%.
"It is high but I would say lower than expected," Filar said. "A lot of analysts were expecting 16% or more. It is a serious challenge.
"I would stress that this unemployment is mainly of a structural and demographic character, with companies restructuring and a large number of people now entering the job market.
"From a social point of view, this does not reduce the challenge, but from a purely economic point of view the picture is slightly less negative."
Pekao projects GDP growth close to 4% in 2001, with the economy accelerating in the third and fourth quarters, Filar said. "The basis for these expectations are some revival of consumer demand ... but also some revival of capital investment due to lower interest rates," he said, indicating that the Monetary Policy Council (RPP) would likely make a series of small rate cuts throughout the year.
Despite the optimistic signals, some economy watchers remain skeptical.
"Actually I am very cautious," said Marcin Mroz, an economist with Wood & Co. "It is difficult to judge the economy by only one quarter."
Mroz attributed improved domestic demand to holiday spending in the fourth quarter of 2000 and cited high unemployment as further reason for caution.
"So I'm still rather cautious about domestic demand in the beginning of this year," he said. "I do not see marked improvement in the first half of the year." He added that he expects GDP growth to be 3.5% for 2001.
That GDP figure is lower than the government's projected 4.5%, and along with lower than planned privatization revenue and increased spending due to high unemployment, the state budget could find itself severely short of cash. Bauc, however, said it is still likely that the government's growth forecast will be met. He also dismissed concerns regarding privatization income, saying the government can find other sources of funding.
