Tuesday, January 22, 2008

With dollar's decline, Poles head to US to spend

With dollar's decline, Poles head to US to spend
The Associated Press
Jan. 22, 2008 10:22 AM

WARSAW, Poland - There was a time when Poles kept their life savings in dollars tucked under mattresses or hidden in socks, counting on the greenback's strength to help them weather the blows of political turmoil, inflation and their own weak currency.

But no more.

The dollar has not only fallen against the euro, but even against the currencies of emerging economies like Poland's, giving unprecedented spending power to a resurgent middle class since the fall of the Iron Curtain.

"During communism, the dollar seemed like a god," said economist Irmina Kurzawska. "But now the dollar is getting weaker and weaker - it seems to be endless."

In the past year alone, the dollar has fallen 21 percent against the Polish currency, from 3 zlotys in January 2007 to a nearly 13-year low of 2.3949 on Jan. 15. The dollar traded at 2.5263 zlotys on Tuesday.

Gone are the days when Americans could live like kings in the region. Today U.S. expatriates and tourists are being squeezed tighter as the dollar buys them ever less of the local currency.

Meanwhile, Poles, who have historically immigrated in droves to the United States to earn those once-prized dollars, are these days just as likely to catch a direct flight to New York for sightseeing and a show on Broadway - and snap up some bargains while there. The newly opened arrivals hall at Warsaw Frederic Chopin Airport, a spacious new terminal of glass and steel, itself attests to the country's growing wealth.

Ewa Wdowiarska, 37, a company director, returned Friday from a four-week shopping trip in New York with her husband and young daughter - and a car.

"It wasn't my first visit to the U.S., but the first time I went only to shop - and it was because of the weak dollar," she said as she pushed a cart piled high with suitcases through the terminal.

The family picked up a one-year-old Mazda6 for $15,000, a bargain even with transport costs since the same car would cost double that in Poland, she said. They also bought clothing, a cell phone and KitchenAid equipment for a house they just had built.

"I earn money in Poland and spend it in the USA - this is something new for Polish people," Wdowiarska said. "The world has changed."

Michal Mroz, 26, a businessman from Krakow, traveled this month to Chicago for work - but slipped in some shopping while there, picking up $700 worth of clothing from Banana Republic, Eddie Bauer and shoes from Ecco.

"You pay three times as much in Poland for brand clothing," he said. "It's rather cheap in the States."

Other benefits of the weak dollar have meant that oil and gas, which are priced in dollars on the international market, have not risen at Polish pumps as drastically as they have for Americans.

But not all Poles are rejoicing - those who are paid in dollars or who rely heavily on American customers are feeling the pinch.

Take Anna Baczkowska, a small shop owner in Warsaw who sells traditional Polish pottery from the town of Boleslawiec, a highly decorated blue-toned ceramic that is popular with many Americans.

She says the weak dollar has caused her sales to fall by about 20 percent each year for the past several years.

"Customers are always thinking about the dollar, complaining that the dollar isn't so good," said Baczkowska, sitting in her office in the back of her shop, ANKO. "I don't have many Americans buying now."

Poland still has its problems in trying to overcome the economic legacy of communism.

Though salaries are rising amid strong economic growth, they still only average around $1,310 per month, making cross-ocean shopping sprees off limits to many.

The country also suffers from a jobless rate of more than 11 percent, while the low wages have driven hundreds of thousands to seek work in Britain and Ireland since Poland joined the European Union in 2004.

Nonetheless, heavy foreign investments and EU subsidies - which have helped drive the zloty higher - have fueled an economic boom that is bringing new life to the long-embattled middle class.

Marcin Panek, 27, a private banker, returned Saturday from a vacation to Florida where he visited Disney World and soaked up rays in Miami Beach, escaping the cold, dark Polish January. He also bought clothes at Gap, Banana Republic and Abercrombie and Fitch, while splurging on a $400 iPhone.

"It's a good time to do everything because it's all cheaper now," Panek said, pulling two large red suitcases through the airport. "It's still richer in the States, but Poland is getting closer."