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Tuesday, December 5, 2023

Bankruptcies of companies and poor data from the industry – a commentary in “Fakty po Faktach” on TVN24

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We are not catching up, but we are falling behind the European Union more and more, said former finance minister Professor Paweł Wojciechowski from the Institute of Public Finance in “Fakty po “Fakty” on TVN24. In turn, economist Dr. Anna Popiołek from “Gazeta Wyborcza” pointed out that “costs for entrepreneurs are growing strongly and will grow even more.

– On an annual basis, year on year, we have once again a quarter where we have lower economic growth – 0.5 percent down. For comparison, in euro area it is 0.6 percent up. (…) We are not catching up, but we are falling behind the European Union more and more. We’re not catching up the Germans, we are not catching up with the Danes or anyone else, on the contrary, we are falling – emphasized prof. Wojciechowski.

“We’re in a consumer recession”

He added that “we have a consumer recession” and “people are spending less”. “This is almost two percentage points less than before,” he explained. He also pointed out that “we’re actually in a manufacturing recession as well,” reflecting a “0.2 percent quarter-on-quarter contraction in industrial production.”

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Read also: Latest industry data. “The third quarter starts badly” >>>

Wojciechowski pointed out that we have more and more companies that are closing or suspending their own economic activity. – And we have a very high one inflation and real decline in wages, said the economist.

He added that when it comes to inflation, Poland “is the second highest level in Europe” and “it is worse only in Hungary and there, indeed, the recession is even deeper.”

– And, above all, we have a decline in real wages. People lose their savings. (…) Inflation is de facto a tax on our salaries, our income. It actually eats our salaries and causes it to collapse under its own weight, so we really have this disinflation effect – said Prof. Wojciechowski.

He also pointed out that “we have the effect of stagflation, i.e. high inflation and very low economic growth.” – This is the most undesirable situation that can occur, because inflation usually occurs when economic growth is stimulated. We have the opposite situation, we have very low economic growth, actually negative, and we have the second highest inflation in the European Union. The main reason is bad monetary policy and bad fiscal policy, i.e. government policy, he stressed.

The former finance minister also said that “stagflation has the face of Glapiński and Morawiecki.”

“Costs for entrepreneurs are rising sharply”

Dr. Popiołek added that “costs for entrepreneurs are growing strongly and will grow even more”. – I would pay attention here to the increase in the minimum wage – this is PLN 30 billion of additional costs for entrepreneurs. So this must somehow be transferred to prices, including the prices of final products – the economist pointed out.

– Poles were also not convinced by the banner hanging on the National Bank of Poland that these prices have almost stagnated for the last four months. This is thanks to the National Bank of Poland. Only Poles still feel this inflation in their wallets, they have to spend more – said Popiołek.

In her opinion, inflation hit “the poorest people who have the smallest budget the most, but on the other hand, this price increase also hit the so-called middle class, i.e. people who earned even well, it seemed to them that they earned well for, say, two years ago”.

– Well, you can say that they fell off this high horse, because they have not saved up to now, they did not have to do it, and now they have to cut expenses, and most often not on food, because they take it upon themselves that they have to spend more spend, leave more money in grocery stores – explained the economist.

According to Popiołek, Poles spend less “on culture, go to the theater less, and to restaurants less often.” – And additionally, they are the ones who most often repay mortgages, because the poorest simply could not afford a mortgage – she pointed out.

Read also: The wave of corporate bankruptcies is growing >>>

Main photo source: TVN24

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