Summary
Polish Finance Minister Jacek Rostowski pulls another excellent stroke in his efforts to demonstrate that Poland may be surviving in the face of a pan-western ignorance about the granular differences of CEE and SEE economies.
Analysis
Polish Finance Minister Jacek Rostowki has been working hard to
establish Poland's economic credibility while the Zloty has been
hammered by an unthinking panic retreat by western investors from the
CEE. He helped coordinate a letter of late which helped at least abate the selling pressure on CEE currencies for a while by demonstrating a sense of unity amongst the stronger CEE economies.
The flaw in that argument of course was that Hungary eventually joined the group of signatories and that rather undermined the ethos of demonstrating that some EU economies were stronger than the prevailing western perception that everything east of Germany is a "basket case."
By noting that Poland wants to play its part in the EU and world economy by helping the neighbors, the Tusk government has brilliantly managed to both showcase the relative soundness of its own economy as well as making it look like a leader of Central Europe during a time of crisis. That will help Poland's standing in the EU amongst its CEE neighbors as it has neatly stepped into a political vacuum as many Western leaders have antagonized or ignored Eastern Europe in recent months.
Whether this will be enough to sustain the recent Zloty rally remains to be seen. The economy continues to function but growth is currently undermined by a credit system which is simply frozen solid due to the predominant western banks all having bigger problems to address before they can consider lending too much again in Poland.
The Polish economy is not out of the woods but even now, the worst predictions suggest an absence of growth as opposed to the massive collapses of economic output now being faced up by neighbors such as the Baltic states, Hungary, Ukraine and indeed, Germany and the rest of the west that is so worried about Eastern Europe.
Nevertheless, in terms of an elegant masterstroke to demonstrate the safety of the economy, noting that Poland wishes to be a net contributor to the IMF is very difficult to beat. Hopefully now the Tusk government will continue to reform and deregulate the sclerotic Polish bureaucracy and unleash the economy to grow rapidly once more...
