War raging in neighbouring Ukraine makes life difficult
Save time by listening to our audio articles as you multitaskThe war in neighbouring Ukraine had no big impact on businesses in the first quarter, as companies still had full order books. But the outlook for the rest of the year is far less optimistic, according to, a Dutch bank. The fighting in Ukraine has increased the risk of serious disruptions to supply chains, creating a deep crisis of confidence.
Economists disagree about which is the strongest of the multiple headwinds blowing against business in Poland, though nearly everyone forecasts a recession this year. For Ignacy Morawski, chief economist of, a business daily, the macro-economic picture is the biggest cloud for foreign investors. Consumer prices rose by 15.6% in June compared with last year, a level unseen in more than 20 years, and up from 13.9% in May, according to Poland’s statistics agency. Interest rates have shot up from 0.
Adam Czerniak of Polityka Insight, a research outfit, thinks concerns over the rule of law and “economic patriotism” are the biggest worries for foreign investors, in particular those from euro-zone countries. Since coming to power in 2015has neutered the judiciary and placed judges firmly under the control of the government. It extols the virtues of “repolonisation”. State-controlled companies bought foreign-owned banks ; the government is now targeting bank profits with a moratorium on loans.
, both greenfield and other funding, was still strong owing to Poland’s well-trained labour force, relatively low wages and closeness to western Europe.flows were up by 79% and the stock grew by a healthy 7.8% compared with a slump by 2.7% for the entire European Union. This yearis set to decline, though it is unclear how cold foreign investors’ feet will become. Since the start of the year investors have dumped Polish stocks in droves.
Business leaders are holding their breath. The government has in recent months stimulated demand with generous tax cuts, which is fuelling the inflationary spiral. Adam Glapinski, the head of the central bank, recently said that the rate-raising cycle is nearing the end, but he did not name a specific timeline. Foreign investors expect both inflation and interest rates to stay high for some time to come and they do not anticipate that the war in Ukraine will come to an end at any time soon.
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