Free Custom «Global Economic Crisis» Essay Paper

Assessing the environment in order to identify a potential threat to a country and responding appropriately is carried out on day to day basis (Nanto 2009). An individual may decide on a time and direction in order to reduce probability of an accident, or test out the door locks every night to decrease chances for theft. The country may employ the same processes to assess the prospective for protection and safety occurrences and devise suitable and useful security dealings.

In 1980 to 1981, Poland underwent extraordinary economic and political crisis. Polish economic performance worsened severely. By the end of 1981 the national income for Poland fell by 25% in a period of 3 years. This caused a severe decline in living standards and unrelenting external unevenness. Poland’s foreign debt amounted to $27 billion and couldn’t repay; rescheduling of interest and principal repayments was negotiated with the international bankers and Western governments. Prospects of a trade balance being re-established before 1986 could not be attained.

 

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There was open inflation at 8.5 % in 1980 and a severe 15% in 1981 (Lukwoski and Zawadzki 2001).

This economic threat resulted in the underestimation of internal imbalance in analysis of endemic and the expanding shortages of basic necessities. Almost 30% of current incomes could not match goods in the shops and insignificant cash loads in the hands of the people. Goods had to be rationed but the rations were not well covered and queues lengthened while the people’s patience ran out. The crisis also resulted in industrial capacity underutilization due to shortages in energy, raw materials and intermediate goods (UNCTAD 2009). The economic crisis grew so severe that labour surplus developed on a huge scale. This led to redundancies, premature retirements and emigration and all the while, labour remained scarce in some vital sectors. Proper reforms had to be implemented to mitigate the situation and central planning and administration in Poland was on the brink of disintegration (Nanto 2009).

As the economic crisis persisted, the political crisis was in the same way heightened (UNCTAD 2009). The number of social conflicts escalated and took the form of strikes, hunger marches, neglect of duty and demonstrations all over Poland. A new union in search of identity, acting like a western-type militant group and an opposition party was formed. Despite extensive management and government alterations, progress towards communism transformation and democratization within the Polish political parties, a political stalemate still existed that resulted in total inaction (Nanto 2009).

European floods

Poland has unfortunately been to a great extent affected by natural calamities (Brussels 2005). Among the disasters are the 1997 central European flood, 2002 European floods and the 2010 central European floods. The most severe was the 2002 European floods that was as a result of a whole week of continuous heavy downpour which in the end wreaked havoc in Europe, particularly in Poland, killing many, destroying properties owned by thousands of Polish citizens, and resulting in damage in billions of Euros in European nations of the Czech Republic, Austria, Germany, Slovakia, Poland, Hungary, Romania and Croatia (Brussels 2005).

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2009 was marked by global financial crisis. Poland was not spared either and preliminary data from the National Bank of Poland revealed that the Foreign Direct Investment inflow to Poland in early 2010 was over 2.2 billion Euros (Nanto 2009). In 2009, with the global financial crisis rampant all over the world, Poland experienced foreign direct investment inflows decline by a small margin of 16% amounting to 8.4 billion Euros. However, even as global financial crisis effects reached the Eastern-European countries, as well as Poland, financial and economic crisis in Poland was less noticeable than it was in other neighboring European economies. Poland was the only EU economy to have been able to evade economic recession in the year 2009 (UNCTAD 2009). Poland‘s economy is currently projected to be among the best performers in the coming years. The vibrancy of economic growth is still stable and it is anticipated to have surpassed GDP growth of 3.8% in 2011 and to have attained the 4% mark in the year 2012. The yearly rate of inflation dropped from 3.5% at the end of 2009 to 2.6% in mid 2010. Nevertheless, inflation in 2011 is estimated to amplify because of the increasing food prices and costs of transportation (Nanto 2009).

Factors that propagated the Polish economy’s resistance toward financial crisis were several and quite different to each other. The most important factor is domestic demand which is viewed as the largest determinant of growth demand in Poland. Significantly, the strong situation of the Polish economy during the worldwide economic and financial crisis increased consumer confidence. In addition, private consumption growth remained steady in 2009 and also in2010. Retail sales in Poland evidently hastened in the late period of 2010 (UNCTAD 2009). They increased by 9.1% in annual terms while a small proportion of exports in GDP limited the effects of the international crisis (Nanto 2009). The factors that encourage economic development and growth in Poland still incorporate development in the labor market and in consumer and business confidence, a vigorous banking sector, the availability of financial capital and the positive reception or appreciation of the Polish currency (Nanto 2009).

Recent crisis and threats to Poland have taught the government on how individuals tend to react to calamities and this guides it in understanding how people affected should be assisted. In the early weeks just after a main event, a lot of people go through distress that is not limited to nervousness, stressful memories, sleep interruption, bad dreams, and mostly agitation. This trend is very frequent and is a logical reaction to trauma. It is also common knowledge that most psychological problems typically decrease over time. As victims begin to understand that the threat is over, they characteristically get over the original stress. A few days after a disaster, most individuals are capable of recovering and adapting psychologically to the new changes. Nevertheless, there often exists a considerable minority who still experience persistent troubles.

Mental health problems may also increase with time most likely for the reason that people's possessions are damaged down. Ongoing activities like delayed rebuilding, community recovery and ongoing financial strain may increase stress levels. The probability that psychological problems may swell over time brings to light a vital point in disaster response. Most individuals reflect on the instant threat the past threat as the source of distress. In real sense, the larger cause of persistent agony comes from the more understated long run effects of calamities.

If any economy is weakened by infrastructure damage, the repercussion on individuals can stay for long. Numerous large scale calamities in the last few years such as the European floods in 2004 hit an economy that was already too fragile. Consequently, the capability for individuals to work and for communities to maintain a sufficient level of output was harshly destabilized. This may lead to subtle increases in misery, fury, and disagreement as individuals cannot make enough income and communities are not able to rebuild. In this case, the psychological effects of any kind of disaster can still be felt later, regardless of the fact that underlying link between the calamity and the observed psychological problems may not be apparent. It can therefore be concluded that threats have a somewhat permanent effect on a victim’s life. Effects can be in the form of fear, trauma, stress or strong feelings of anger. Efforts to respond to disasters is mainly through provision of counseling to those involved based on the assumption that humans are vulnerable and are in constant need of psychological help. This does not always work and therefore the process cannot be proven to be true.

Poland prides itself to have been the first state in Central and Eastern Europe to take on the conversion from communism to democracy. The changeover was managed through consultations between the majority ruling party and the resistance movement which occurred under high insecurity as the counter actions the Soviet Union would employ against these developments was quite hard to assess.

It is worth noting that the round-table negotiations in 1989 were quite a remarkable achievement showing the ability of the Polish people to agree upon the changeover without violence. However, disparities between communism sympathizers and those against it still exist up to date. The agreement in 1989 created a bitter-sweet relationship between the two parties and a gap that could not be bridged. Current political moves made by the present politicians are still associated to the past events. Another significant political achievement to Poland was its membership to the EU which marked an important point in its transfer from a Communist authoritarianism to an open market democracy with freedom and liberty to all.

Besides the political developments in Poland, the Polish economic alterations were initiated before 1989. It was commonly referred to as the “shock therapy” change which was linked to the then Minister of Finance Leszek Balcerowicz. These economic changes in Poland are equally complex as the political reforms. Looking at the reforms in a wider angle and more so concentrating on the macroeconomic indicators only reveals that Poland in comparison with other Central and Eastern European countries is a symbol of success. Since implementation of the economic reforms, the Polish overall GDP almost doubled in two decades. In 2011, the GDP of Poland stood at about 185% of the level in 1989. The country’s position in the EU and the 1990’s developments contributed to this trend. Due to past economic developments, Poland is currently under pressure to perform so as to maintain the trend and also keep its position in the EU.

In the year 2005, elections dubbed “critical elections” which altered the structure of the party system mainly its business and interparty collaboration and disagreements. The government that then came to office initiated an extraordinary crusade to restructure the complete constitutional arrangement of the Republic of Poland. This idea failed mostly as a result of open authoritarian trend and obvious disregard for democratic principles for example the liberty of the central bank and sovereignty of the constitutional tribunal. In recent times, the Polish government has a mandate to promote free and fair elections to avoid conflicts and tension as experienced in earlier years.

Inflation in 2009 was about 4% and in the year 2010 it stood at - 2.5%. It has maintained stability over the last decade keeping it below 4%. The economic and financial crisis in 2009 resulted in the rescheduling of the launching of the Euro in Poland (Nanto 2009). The government’s patent objectives are the support of macroeconomic stability and the battle against fiscal debts. However, the global economic and financial crisis affected Poland to a lesser level than other E.U. countries. In 2008, the Polish government introduced a bill that aimed at altering public finances so as to meet E.U. conditions and an anti-crisis docket was launched to curb the worldwide financial disaster. Statistics reveal that public debt has increased from 47% of GDP in the year 2008 to 51% in 2009 and later grew to 55.5% in 2010 (Nanto 2009). Consequently, government expenditure reduced to 16% in 2009 from 19% in 2008. According to the EBRD 2010 changeover report, the Polish budget deficit was at 7% of GDP in 2009. The rate of unemployment has increased from 7% to 8% and then to 10% of the labor force in 2008, 2009 and 2010 respectively. This socioeconomic problem remains a real one up to date and the government needs to find ways to mitigate the problems (UNCTAD 2009). Measures are in place to curb any similar occurrence as the global financial and economical crisis that rocked the world in 2009. Past social problems concerning employment and the work place caused a lot of unrest, demonstrations and strikes and therefore the current government has to maintain equilibrium conditions so as to avoid industrious actions (Lukwoski and Zawadzki 2001).