POLAND: ECONOMIC SLIDE CONTINUES

Created: 7/7/1981

OCR scan of the original document, errors are possible

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SPECIAL ANALYSES

POLAND: Economic Slide Contim-es

Poland's peaty congreee vill take placeaakground of economic disarray. Ths disorganized and demoralised Warsaw leadership has been unable to gain oontrol over the eoonoey or to convince workers of its competence and good faith.

The decline in outputaccelerating. The labor force ishorter week and absenteeism hassubstantially. The hard currency squeeze haaainful cutback in imports of industrialand spare parts, and domestic raw materials, particularly coal, are in short supply.

Agriculture is the one bright spot, with favorable weather and higher procurement prices pointing toin the production of most crops. Including grain. Even so, rationing is atill necessary and food linoa remain long.

The regime has attempted to pacify the population by Increasing imports of consumer goods from non-CossiuniBt suppliers. Importe of producer goods from the West,are down, forcing some industries to operate at onlyoercent of capacity. fMj

The Financial Pi-.ture

Even with the extenalve debt relief it has already received, Poland atillt service obligations of aboutillion in the second half Since hard currency imports are now running0onth, Warsaw cannot cut back enough to cover aportion of this bill without causing another decline in domestic economic activity and more aerious shortages of critical consumer and industrial goods.

Some sort of suspension of debt service paymente seems likely in the next few months. The Sovietshave no intention of providing more hard currency

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bank! have "fused to increase theirthat western

governments are prepared to extend additional large-scale

Prospects for Recovery

he aconomic recovery will bo difficult to got started. smy

,DnM;;'f? J? of Solidarity will bo crucial. It now STTT-Sii^Jfna wiChand gradual SnJiihK Tto bo introduced before

ncomes of lower paid workers and progressreater role for

SS nnfrin(aMUU19ren,:- on, however? that the union is ready to support the tough austerity measures needed for optimum, recovery. Mmm XZy

u, a Cnatlong as Polish workers

Petent cor"Pt. and incom-ErTZlJSS are unlikely to put forth greater effort on

2 'hJfl*inmaCC'pt aof living that, HJH lMmoderately ovor tho next several years. There may bo some room for optimismthe party congros.-tho populace consider, that prospects

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Original document.

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