Polish economy on the brink? Experts inform against the crisis

Polish economy is in critical moment, and marketplace economists and analysts inform against the expanding symptoms of the upcoming crisis. Despite authoritative messages of falling inflation, real purchasing power of Poles is decreasing, and rising life costs, unstable gold and labour marketplace problems make a worrying picture. Are we in danger of the most serious economical shock since the systemic transformation?

Declining purchasing power – rising cost of living

Official inflation data can be misleading. While inflation rates can show a downward trend, real purchasing power The average Pole is systematically decreasing. Prices of basic products and services – food, energy, transport, rents – grow at a rate that exceeds the increase in wages. It's a phenomenon called ‘silent inflation’, makes it increasingly hard to make ends meet, especially for lower income households. Price increases most First- Needed ProductsWhat hits the poorest.

Unstable gold – capital outflow and more costly imports

The situation worsens instability of the Polish currency. Gold loses value in relation to the main currencies (euro, dollar), which has a number of negative consequences:

• Foreign capital outflow: abroad investors, fearing further weakening of the gold, retreat their investments from Poland.
• More import: Weaker gold means higher prices of imported goods and natural materials, including fuels and energy. This in turn drives inflation and increases production costs for Polish companies.
• Increase in external debt: Debts drawn in abroad currencies become more costly to handle.

Labour marketplace – a threat to SMEs

Although the labour marketplace in Poland was considered unchangeable for a long time, the first signs of the coming crisis appear. Small and medium-sized enterprises (SMEs), which is the foundation of the Polish economy, are struggling with the expanding cost of operating:

• Increase in energy and fuel prices: It importantly increases production and transport costs.
• Increase in minimum wage: Although beneficial for employees, for many companies it is an additional burden.
• Increase of ZUS contributions: Another origin that increases employment costs.

As a result, more and more SMEs are signalling problems in maintaining employment. Analysts inform against wave of redundancies and Increase in unemployment in the coming months.

Government actions – immediate solutions, not a strategical approach

The government is taking action to mitigate the effects of the crisis (e.g. support programmes, crisis shields). However, experts stress that these are solutions Ad hocwhich do not solve the fundamental structural problems of the Polish economy. Missing long-term strategy improvement that takes account of the challenges ahead and ensures unchangeable economical growth.

How to defend your finances? – expert recommendations

In the face of expanding threats, financial experts urge that Poles accept defensive strategy in the management of individual finance:

• Reduction of unnecessary expenditure: Exact home budget analysis and cancellation of unnecessary purchases.
• Building a financial cushion: Establishment of a financial reserve in case of failure of work or another unforeseen expenditure (the amount recommended is equivalent to 3-6 monthly expenditure).
• Search for additional sources of income: Consider taking additional work, freelancing or any another form of earning.
• Diversification of savings and investments: Not putting all savings in 1 place (e.g. in golds only). Consideration of investments in abroad currency, gold, real property or another assets that may hold value during the crisis. However, the risks associated with each form of investment should be borne in mind.
• Avoidance of excessive debt: No fresh loans, especially those with variable interest rates.

Potential social impacts of the crisis – inequality and migration

The forthcoming crisis may have serious social consequences:

• Deepening social inequalities: The people with low incomes and those who lose their jobs will endure the most. This may lead to the formation of the alleged "new mediocre class" – people working but incapable to meet basic needs.
• Increased social tensions: Deepening inequality and frustration due to deteriorating economical situation can lead to increased social discontent and protests.
• Labour migration: deficiency of career prospects and low earnings can prompt Poles, especially young people, to labour emigration. This may aggravate Poland's demographic problems and weaken the country's economical potential. Migration can besides be Internal – from smaller towns to larger cities.
• A decline in assurance in institutions

Key actions – solidarity and long-term strategy

Experts emphasise that the key to the coming crisis will be:

• Social solidarity: common support and assistance to those most affected by the crisis.
• Effective shielding of countries: Introduction of support programmes for job-losses, increase in unemployment benefits, aid with the repayment of loans.
• Long-term economical improvement strategy: The implementation of structural reforms that will increase the competitiveness of the Polish economy and guarantee unchangeable growth in the future. Investment in education, innovation and green transformation.

Without decisive and comprehensive action, Poland can face a prolonged recession and a deep social crisis.