Austerity – yes, but not in Poland?

Recently George Osborne has warned that austerity could last until 2018 in UK. In Poland however it appears austerity noticeably lighter.

The governor of the Polish central bank (NBP) has said that Poland, which has slashed its budget deficit by more than four percentage points in two years, had experienced a ‘perfect slowdown’ rather than a slump, and that the time for austerity was over.

“The pace of budgetary consolidation is slowing, which I hope will give the economy some breathing room. We are not encouraging the finance ministry to further excessive fiscal consolidation at this time,” Marek Belka told the Financial Times.

While countries such as Portugal and Greece have to implement spending cuts, Poland, whose borrowing costs are at record lows, is not under any such constraints.

While Polish growth is slowing, the country does not have any glaring imbalances – public and private sector debt is not excessive, the banking system is solid and unemployment, while growing, is not catastrophic.

“We aren’t dancing with joy but I can say that this is just a `perfect slowdown’. We aren’t seeing any kind of a collapse,” said Belka, adding that a technical recession is “improbable” in the only EU country to have dodged such a contraction over two decades.

“Of course 2013 will be difficult, but we think that during the year the economy will start to revive.”

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