Despite a steady flow of assurances coming from government officials and most market analysts on the minor effect of the global financial crisis on the Polish economy, quite a few developments of the past days seem to be indicating that Poland might not be all that immune.

Slawek Szefs reports.

The signs are numerous, some indeed quite spectacular in the negative sense. The Warsaw Stock Exchange closed last week with the biggest low of its major index in four years. The situation was forced by developments in Hungary. The automotive industry in Poland has started experiencing the effects of the Western crisis with production breaks scheduled at the Opel plant in Gliwice and talk of redundancy measures. Predictions regarding next year's FDI in Poland also had to be considerably down scaled. A wave of returns triggered by the crisis among Polish job seeking emigrants is bound to increase unemployment figures shortly. The list is long.

More and more Poles are begining to wonder who is right, the optimistically inclined government ministers and experts or the media reporting on hardships already manifested in daily economic reports? Marcin Mrowiec, analyst for Pekao SA, one of the major Polish banks says there is no reason for panic, but neither for complacency: 'We have to be precise in defining the problems we are dealing with. And if we are precise, then it becomes obvious that, first of all, it is true what the experts are saying and, secondly, it doesn't exclude the possibility of a slowdown. Basically, what the experts were saying, and I also agree with this view, is that in the Polish banking system we don't have this type of problem as in the US or European banking systems. Polish banks were not lending to sub-prime borrowers and they did not buy instruments based on those loans. But another point is that everybody more or less was expecting a cyclical slowdown next year and this slowdown is starting. And it will be aggravated by those problems in the financial system. So we will have a slowdown and it will likely be deeper than it would be without the problems in the financial market. But on the other hand our banking system is sound and we don't have the same problem as the US or many European countries.'

What can be done to soften the effect of the global financial crisis on the Polish economy? Jacek Wisniewski from Reiffeisen Bank Polska is of the opinion that the matter cannot be avoided altogether, but much has already been done and is planned in anticipation of the negative influence of foreign markets: 'Firstly, which is currently done by the central bank and the government, is to deal with the so-called credit crunch that banks cannot take more loans for theirself. They have a problem with rolling over the existing loans. I think that what the central bank did is quite a good job in order to avoid short term liquidity problems. The problem of longer term liquidity would be felt, even if the whole Polish banking sector is healthy. The banking sector is waiting for a guarantee of inter-bank deposits.'

Jacek Wisniewski adds that despite the good moves to protect the banking sector in Poland, the country's economy is linked, sometimes even directly, to events on foreign scenes: 'We can't avoid the economic impact of the crisis. A slowdown in the euro-zone will heat Polish exporters. Then, they will start to fire people and the unemloyment rate will go up. When the unemployment rate goes up, the job market will be in an equlibrium and wages will stabilize. So there will probably be tougher times for both exporters and producers for the Polish market.'

Then the ball would be in the court of the government, compelling it to act speedily on public finance reforms and adhering to very tight budget discipline. Something which has to be done regardless of the current global financial crisis.