President Komorowski wants "geographical diversification" of Poland's trade Courtesy of Krynica Economic Firm

As the Polish economy shows signs of a sharp slowdown and worries mount among economists as to how the country will cope, President Bronisław Komorowski last week laid out an economic plan that he said would help Poland “defend itself from the crisis.”

Speaking at the Economic Forum in Krynica, Mr Komorowski listed five priorities that he said the government needed to concentrate on.

The first of these was the improvement of Poland’s public finances. “We need to gradually reduce our deficit and public debt so as to reduce dependency on financial markets and create a safety buffer as well as room for maneuver in fiscal policy,” Mr Komorowski said.
He added that the cuts in public spending should be made as the private sector rebounds so as to keep the economy growing.

Second, the president pointed to the private financial system. Though he stressed that Polish banks are in good shape, he said it was “necessary to finish work on a deep restructuring and even on readjusting the ownership rules of banks if a danger arose.”

Polish banks’ profits in the first four months of this year were 14.2 percent higher than during the same period last year. However, the president said the changes he is proposing would act as “additional insurance policies for citizens who have savings or have taken out loans.” Some observers worry that as the crisis bites in other European countries, foreign banks might withdraw capital from their Polish operations to shore up finances in their home markets.

More flexible labor market

Third, President Komorowski said he wants to reform the labor market to improve support for the unemployed, to give them better incentives to seek employment and to offer more flexible options for employers. He said “getting people to work and not on unemployment benefits should be the focus of labor agencies.”

Unemployment has remained a serious problem in Poland since the economic transformation in the early 1990s. It currently stands at 12.3 percent, up from the same period last year but an improvement from the nearly 20 percent unemployment rates in the early 2000s.

Fourth, Mr Komorowski said it was necessary to “cultivate the country’s absorptive domestic market” which has so far acted as a safety buffer against the threat of crisis from abroad. Poland’s domestic consumer spending is greatly credited as one of the biggest reasons the country came through the first wave of the global economic crisis without going into recession.

Finally, President Komo-rowski said that the Polish economy must be opened up to new markets. There must be a “geographical diversification of Poland’s trade and business relations,” Mr Komorowski said. He added that Polish exports have become increasingly reliant on a few major markets, mainly in the EU, and that this pattern of trade involved “dangers” in the present economic environment.

A quarter of Poland’s exports go to Germany, making the Polish economy vulnerable to slowdowns suffered by its western neighbor.

Mr Komorowski announced plans to organize enabling meetings involving Polish businesspeople during his foreign visits, like the one held in the course of his trip to China last December, with a view to promoting the Polish economy and facilitating new contacts.

After laying out these priorities the president argued that to successfully fight the crisis in Europe more EU integration was needed, especially in terms of economics.