Your humble blogger is trying to dig herself out from under a pile of overdue estate administrativa, hence my temporary absence. But guurst sent along this sighting about Poland’s spending plans, which look destined to drive Poland into even more severe inflation and a currency crisis. It looks like Ukraine will not be the only country that breaks itself in attempting to break Russia.
So forgive me for taking the easy way out and simply hoisting one-time NC writer Philip Pilkington’s informative tweetstorm.
2/ The plan is to increase defence spending by 2.6% of GDP. With $17bn of new contracts with the US and South Korea, they’ve already hit 2.5% of GDP. ALL of that money flows abroad! pic.twitter.com/eQ5HyVHWqz
— Philip Pilkington (@philippilk) November 25, 2022
4/ Now add on the 2.5% of GDP being spent on weapons and we get to a 6.5% of GDP current account deficit. In a relatively poor Central European country with its own currency! 🚨
— Philip Pilkington (@philippilk) November 25, 2022
6/ The zloty has declined 12% this year against USD. That’s nothing in compared to what’s coming. If you think a relatively poor country with an inflation rate over 10% higher than the US and a current account deficit of 6.5% of GDP can survive for long I’ve got a bridge to sell. pic.twitter.com/DbNrakpyfM
— Philip Pilkington (@philippilk) November 25, 2022
8/ This isn’t simple mismanagement. This is the sort of policy making you see in basket-case economies. If Poland collapses into actual hyperinflation will it remain an EU member state? Not clear.
— Philip Pilkington (@philippilk) November 25, 2022
To Pilkington’s final point, Poland has already been in a row with the EU over its refusal to change its judicial structure and other matters. That has largely been put aside for the moment due to Poland’s hawkish stance against Russia.
So what happens when Poland’s economic tsuris leads to its working age adults departing in droves to earn income elsewhere? Oh, and coming maybe only a year or two after Europe contending with refugees from Ukraine?
