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Wednesday, February 28, 2024

“You have to cure the disease, not just extinguish it with immediate, painkillers”

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Inflation in Poland has been the highest in 25 years. – At the moment, the disease needs to be cured, not only extinguished with painkillers. It simply will not be good for the economy, said economist, professor at the Academy of Land Forces, Dr. hab. Joanna Hołub-Iwan, referring to inflation in Poland.

The professor was asked if Poland is in danger of a recession. – In fact, you must honestly answer that yes. The specter of recession hangs over us for many reasons – ongoing war in Ukrainethe situation outside our country, the situation related to the economic environment, but also to what is happening in Poland, the increase in prices – she mentioned.

When asked if Poles would have blood, sweat and tears in winter, she replied: “I wouldn’t say that, winter in Poland will not be that hard”. However, she added that it will certainly not be an easy period for the economy.

According to the economist, “we are not looking for the causes of the disease, but suppress the disease”. – We get sick, the economy is sick due to various factors, such as interrupted supply chains, conflict in Ukraine. It is also related to the behavior of consumers who have been used to it for many years and strived for better life. Money seemed easy. At the moment, the disease needs to be cured, and not only extinguished with painkillers. It just won’t be good for the economy, she said.

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– Lifting interest rates it is such a panacea to moderate consumer demand a bit and make people buy less, spend less on things that they certainly do not need to live. You have to think about your expenses a bit and maybe give up some things. Of course, it will not be a voluntary resignation, that we do not buy a service and save money thanks to it. We will give up because we will not be able to afford it – she said.

The situation of borrowers and the labor market

The economist also referred to the situation of borrowers. – When it comes to loan installments, it is also a matter of economic education of the society. When I was entering maturity, there were still such beliefs of my parents, or maybe other people, that the loan and installments could be canceled. For me these were abstract concepts, for an economist that something is redeemed. Perhaps some people think that this part will be written off, there will be credit holidays now – she assessed.

The professor drew attention to the phenomenon of the so-called working poor. – They work, but their salaries are not enough to cover all the obligations they have. To cover loan installments, purchases, food, or other things. This phenomenon can affect us, so far we have been positive, we were positive entrepreneurs, and positive entrepreneurs increased wages and employment. Now entrepreneurs have found out that the situation may be completely different and they will strive not to employ or hire under such conditions, so that they can quickly resign from such an employee – she explained.

Inflation in Poland

According data of the Central Statistical Office (GUS) inflation in June was 15.5 percent on a year-on-year basis. This is less than stated in the so-called quick estimate. According to detailed data, fuel prices increased by 122 percent year on year, and gas prices increased by 46.2 percent. June inflation at 15.5 percent is the highest since March 1997, over 25 years. The price increase was then 16.6 percent.

Inflation in PolandPAP / Maciej Zieliński

Main photo source: Shutterstock

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