Managing to weather the storm
Overview:
Poland is weathering the severe global economic slowdown better than most. Economic growth is certainly slowing sharply but is still positive in contrast to the dramatic economic contractions being experienced elsewhere. A large domestic market and limited macroeconomic imbalances at the start of the crisis have helped. Sensible economic policy measures and institutional constraints (Inflation Targeting and the aim of Euro adoption) have also played a part. Nevertheless, a sharp reversal of capital inflows in H22008 brought the zloty and the level of foreign exchange reserves under significant downward pressure. Although these pressures have eased the authorities, noting that these moves were largely driven by financial market contagion, have sensibly secured a US$20 billion Flexible Credit Line from the IMF.