How the Polish Economy Escaped Recession: Model Based Simulations

The impact of the world financial crises and especially of the recession that spread in 2009 all over the Europe occurred constrained for Poland. The Polish economy was growing over all quarters in 2009 at low rates of growth, however. The paper tries to show by means of simulations based on the W8D model of the Polish economy what were the major factors behind the serious slow-down not leading, to a recession however. The growth will be split into the impact of declining exports and FDI and the growing investment risk as well as low but positive growth of household consumption. The likely impact of fiscal and monetary policy will be distinguished. The effects of decline of income tax rates and social contribution rates will be shown. The impact of declining interest rates on investment and consumer demand will be evaluated. The likely effects of packages aimed at constraining the increase of unemployment rates will be analysed. The paper justifies the optimistic forecasts for the years 2010-2011. The results will be compared with the previous simulations based the W8D model.