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Economic downturn will make membership in the common currency more difficult.
The problem in Poland, as in almost everywhere else in the world, is that the downturn is turning out to be a lot more severe than just about anyone anticipated.
Early last year, the government was confidently predicting that the economy would grow by more than 4 percent in 2009. By the end of the year that number had shrunk to 1.7 percent, and in its latest predictions, the European Commission says the Polish economy could contract by 1.4 percent this year.
Even that level would still be better than almost every country in Europe, but it would make joining the euro very difficult. If the economy tips into recession, government spending will increase sharply to cover expenses like unemployment benefits, while the tax take will shrink.
Tusk said the government would revamp the budget in July, and Rostowski said the deficit would come in at no more than 4.6 percent of gross domestic product this year. But the commission forecasts 6.6 percent this year followed by 7.3 percent in 2010. The criteria for joining the euro specify that the deficit cannot be more than 3 percent of GDP.
Now that the pledge to join the euro has served to defend Poland from some of the shock of the downturn, doubts are beginning to arise about the need to rush toward the common currency. As the panic begins to recede from the global economy and the worries about a systemic collapse turn into a realization that the world is probably facing a severe recession instead of a new Great Depression, some voices in Poland are beginning to say it might be no bad thing to stay out of the euro for a bit longer.
The Polish zloty has lost almost a third of its value against the euro and the dollar, which has given a boost to local exporters.
“If the zloty got weaker it would really do the economy a lot of good,” said Tom Kolaja, of Kolaja and Partners, a Warsaw management consultancy. “It’s almost better for Poland to stay out of the euro for a while.”
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