Answers are needed to long-term structural questions relating to the growth of the economies of Central Europe, according to Marek Matraszek, chairman of public affairs agency CEC Group, based in Poland.
First, how will the transfer payments “game” play out between the European Commission and a number of countries in the region, notably Hungary, where payment is being linked to rule-of-law issues?
“The numbers being bandied about as potentially being blocked are huge,” Matraszek told Real Asset Insight’s Richard Betts. “Hundreds of billions of euros – in transfer payments,” he added.
“The recovery packages are in place and that’s one big uncertainty because obviously the dynamics of economic growth are going to be determined, to a large extent, by whether that relationship will improve or not.”
But a resolution is unlikely for some time, especially in Poland, he said.
Matraszek explained that the second question on everyone’s lips is, what will be the long-term impact of the covid crisis?
Polish government ‘could do more’ about covid
Although nobody can control the crisis, the Polish government could do more, he said.
“Because of the delicacy of various factional parties, the ruling coalition is fearful of taking a robust approach on covid control and it’s very unlikely that you will see some of the measures seen in Holland, Austria, Germany and France in terms of covid passports, mass lockdowns, employee vetting based on covid inoculation. It is almost impossible politically in Poland and that means that Poland could be hit much more dramatically over the course of this year by covid than many other countries, and that will impact growth.”
He said a third area of uncertainty is the combination of EU energy policies combined with Russian manipulation of gas prices.
“In a number of these countries, especially Poland, you’ve seen huge inflationary pressures mounting up for political reasons and for electoral reasons. It’s not clear to me whether, in particular, the Polish government has got either the political will or the political ability to crack down on monetary growth and on inflation,” Matraszek said.