Trade, Innovation, and Productivity
On May 05, the United States backed the idea of patent rights waiver for Covid-19 vaccines to stimulate supply and improve access worldwide. The US thus joined a group of more than 100 countries, including India and South Africa, advocating for lifting intellectual property rights on Covid-19 vaccines. Following this US decision, the European Commission President stated during the State of the Union address on May 6 that the EU was ready to discuss the issue, even though some Member States (including Germany) remained reluctant to the idea of patent lifting. While more than 100 patents have already been granted on mRNA platform technologies used for Covid-19 vaccines, companies such as Teva (Israel), Incepta Vaccine (Bangladesh), and Biolyse Pharma (Canada) that do not own these patents have failed to get voluntary licensing deals. The proponents of the patent waiver claim that it would speed up vaccine production and provide more affordable doses to developing countries by scaling up the production and increasing local production capabilities. On the other hand, pharmaceutical companies suggest that the patent lifting would not solve the global access problem and might constitute an obstacle to research and innovation over the longer term.
Labour Market and Environment
On May 24-25, the EU leaders met in Brussels to discuss, among others, the new EU climate target related to reducing greenhouse gas emissions – an important component of the Fit for 55 package to be announced by the Commission in mid-July – and define specific sectoral actions within the framework of the EU climate policy. While the agreement was achieved on an overall increase of the emissions reduction target to 55% by 2030, heads of state have not been able to agree on a common position as regards the details of the implementation, especially those related to financing. Most of all, the Polish Prime Minister insisted that current emissions rules are geared toward the rich and hence lobbied for more significant sources within the EU Modernisation Fund – a scheme dedicated to supporting the green transformation of the countries with large coal industries or lower GDP. The final conclusions of the summit ultimately omitted contentious issues on the emissions reduction rules in transport and construction, among others, which were included in the initial draft.
Macro and Fiscal
April HICP inflation read-out put Poland (5.1%) in second place, only slightly behind Hungary (5.2%), in terms of y/y consumer price dynamic. This is the highest level recorded in more than 20 years, although according to CPI methodology the increase was lower – 4.3% – and did not stand out as much compared to recent years. In either case, inflation went far beyond the target set by the National Bank of Poland and may become one of the main challenges for the government and central bank in coming months. Reasons for such high levels of inflation are not obvious – naturally the crisis related to the Covid-19 pandemic would be the first to blame but an increase this high has not been observed in most EU countries (the EU-27 average stood at a high but not unusual 2%). Similarly, blaming prices of oil would provide a partial explanation – increase in prices of oil was mostly apparent because of low base effect, not necessarily because the prices were exceptionally high. Finally, some experts point to monetary policy as the main culprit for this outstanding price increase compared to the EU counterparts and not very well thought out communication conducted lately by the National Bank of Poland. On the other hand, some positive symptoms come from Online CASE CPI – the latest read-out suggest that inflation is starting to subside.