rate hikes in the US is one of the biggest external threats to the Polish economy. Because they do not have Polish economy will have better conditions to develop without interference. At least these foreign interference, which always are so nasty, that nothing of them can not be done.
mechanism that leads from a possible decision of US Fed’s interest rate hikes to the condition of the Polish economy is as follows:
Fed raises interest rates. This causes the growing interest on loans in dollars, while the same dollars become more expensive (because higher interest rates in the US attracts capital investors buying dollars conquering its exchange rate against other currencies).
more expensive dollar and higher interest rates on loans in US dollars makes it harder to repay these loans. In Poland today the debt in dollars almost gone. The company if they take loans either in gold or in euro. But large debts in dollars is a feature of many other developing countries that do not have their own capital to finance the development of its foreign loans. Therefore, a rate hike in the US the most indebted companies from developing countries lead to bankruptcy. This in turn can cause these countries the economic crisis.
Today, emerging economies such as China, India and Brazil are the top ten largest economies in the world. The crisis in these countries would mean a serious disturbance for the developed countries – the business of their biggest markets would clearly broke. In this way, the problems would reach exporters from the euro zone, which is also to Germany. The crisis in the German economy and other euro area countries means that for the moment we have it also at home.
The whole chain of events is long. It would take it all too likely for a long time. Along the way, certainly wydarzyłyby to some other things to predict. World economic situation it is impossible to transcribe and plan for many months forward. But one thing is quite clear. At the beginning of the road to potential problems are interest rate hikes in the US.
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PRL went bankrupt in 1980, just before the significant increase in US interest rates. Bankruptcies Asian tigers in 1997, also happened through the issue of debt dollar. Today the debt in dollars in the world is also quite a lot. So that thanks to the attitude of the Fed dollars now instead get more expensive, cheaper. They cost less than PLN 3.83 – the cheapest since October 2015
investing.com
If it were only about the US economy, the Fed probably will not fearing the courageous moves. But the reality is that US interest rates today concern all over the world. That is why it is good that they do not grow.
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