The recent improvement in some statistical indicators does not necessarily mean that the Polish economy is recovering

The search for signs of recovery in the economy is like looking for signs of spring after a long, cold winter. Optimists welcome good figures in Polish exports despite unfavorable trends in Germany, Poland's main commercial partner. Domestic demand is less encouraging. Pessimists note that even though industrial production has been growing from one month to the next, its rate of growth in January, 4.2 percent in year-on-year terms, was slower than in December 2002. Inflation, on the other hand, dropped in January to a record low of 0.4 percent, against 3.4 percent in January 2002 and more than 7 percent in January 2001. Some analysts fear deflation, or a general reduction in the prices of goods and services, accompanied by reduced production and higher unemployment due to a decreased influx of money into the economy. That fact that inflation has been kept in check fuels expectations that, at its next monthly meeting, the Monetary Policy Council (RPP) will cut interest rates still further. However, despite calculations by those supporting radical rate cuts and hoping that this could boost economic growth, the first tangible results of rate cuts-in the form of concrete investment decisions made by entrepreneurs-may only be visible after several months at the earliest. In their day-to-day operations, investors are especially plagued by high taxes and bureaucracy.