Poland Won’t Join Currency War Amid Slowdown, Cichon Says

Poland won’t seek a weaker currency to boost growth as the economy is set to benefit from the government’s investment program and easier access to credit, Deputy Finance Minister Janusz Cichon said.

The zloty is “quite stable” and its current exchange rate is “favorable” for the competitiveness of Polish exporters, he said in a March 14 interview. The currency has weakened almost 1.6 percent against the euro this year, less than the Czech koruna and Hungarian forint.

The three eastern European countries are seeking ways to spur expansion after the recession in the euro area, their main trading partner, curbed demand for exports. The room to stimulate growth through government spending is limited as they all pledged to narrow their budget deficits to 3 percent of economic output, in line with European Union requirements.

“Poland doesn’t want to get into currency wars,” Cichon, a lawmaker from the ruling Civic Platform who joined the ministry in January, said at his Warsaw office. “Every attempt to intervene or manipulate the exchange rate runs the risk of creating volatility.”

The $515 billion economy is now enduring its toughest period since emerging from the financial crisis as rising unemployment hurts consumer spending and the impact fades from a construction boom before co-hosting last year’s European soccer championship. The EU predicts growth will slow to 1.2 percent, the worst in 12 years. That contrasts with the government’s 2013 budget assumption of 2.2 percent growth.

“We can say that our growth forecast is very, very optimistic,” Cichon said. “We cannot yet say, though, that it’s unrealistic.”

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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