Fiscal Study

IN TWO RESPECTS, Poland's economy resembles America's. Consumer prices are rising at about 4% year, while imports trump exports by a margin of around 4% of gross domestic product. The similarities stop there. Poland's economy is expected to grow nearly 6% this year net of inflation, some five percentage points faster than projected U.S. growth. Polish stocks have produced more than four times the gains of American ones over the past five years. One Polish Zloty bought an American quarter five years ago. Today it buys 46 cents, SmartMoney reports:

Eleven months ago, on a trip to Bialystok, I found time to wipe the lager foam from my nose and write up a recommendation of Central European Distribution (CEDC). Based in Warsaw, it's Poland's largest distributor of local and imported beer and spirits. Poland, in turn, is the world's No. 2 vodka drinker and Europe's No. 4 beer drinker.

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European Central Bank President Jean-Claude Trichet dashed speculation he will cut interest rates soon and signaled he doesn't plan to halt the euro's surge against the dollar, Bloomberg reports:
``The current monetary-policy stance will contribute'' to curbing inflation, Trichet said at a press conference in Frankfurt today after leaving the key rate at a six-year high of 4 percent. He declined to step up his rhetoric on the euro, repeating his mantra that U.S. authorities favor ``a strong dollar.''

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The European Central Bank's resolve to fight inflation may diminish following the U.S. Federal Reserve's emergency interest-rate reduction, The Bloomberg reports:

Investors increased bets on the ECB's first cut since 2003 after the Fed lowered its rate by three-quarters of a percentage point to 3.5 percent. European policy makers may now even consider a half-point reduction to spur confidence, said the Royal Bank of Scotland Group Plc's Jacques Cailloux.

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The European Central Bank's resolve to fight inflation may diminish following the U.S. Federal Reserve's emergency interest-rate reduction, The Bloomberg reports:

Investors increased bets on the ECB's first cut since 2003 after the Fed lowered its rate by three-quarters of a percentage point to 3.5 percent. European policy makers may now even consider a half-point reduction to spur confidence, said the Royal Bank of Scotland Group Plc's Jacques Cailloux.

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EUROPEAN countries are buffeted by two global forces: atmospheric pressures that, as it were, change the weather, silently transforming societies and the assumptions of public policy. One is climate change (a change in the weather literally). The other is demography, The Economist reports:

The two have a lot in common. Both are easily recognised but less easily understood. Both are products of complex forces and unobtrusive influences. Both create huge effects from minuscule changes. A rise in global temperature by one degree or a fall in fertility by one point may sound trivial but, over 100 years, will make the earth unbearably hot, or reshape the size and composition of societies.

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Bond markets in the UK and Europe slumped on concern that the Bank of England and the European Central Bank will continue to raise interest rates, The Telegraph reports:

The yield on the British ten-year Government bond reached 5.47pc, close to the highest in seven years, while the yield on Germany's ten-year bond jumped tp 4.63pc, the highest in almost five years.

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With euro-zone interest rates near a six-year high, European Central Bank policy makers are clashing over the role of the swollen supply of money in pushing up prices, Wall Street Journal reports:

That rare break in the bank's public facade of unity suggests policy makers are divided about how high to push interest rates in the 13-nation currency bloc, and it could rekindle a global debate on the merits of monitoring money supply.
Broad definitions of money supply include currency in circulation -- such as cash in consumers' pockets and retailers' registers -- as well as bank deposits, deposits in money-market mutual funds and commercial-bank reserves at the central bank.

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Economic growth in the euro area slowed to 3 percent while the EU as a whole expanded by a slower 3.2 percent in the first three months of the year as household spending barely moved, according to the European Union, Associated Press reports:

The jobless rate in the 13 nations that use the euro fell to a new low of 7.1 percent in April, despite the slight slowdown, the statistical agency Eurostat said.
The economic figures come after a strong finish to 2007 that saw gross domestic product grow 3.3 percent in the euro area and 3.5 percent in the EU.

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