Fitch raises Polish 2021 GDP growth projection to 5.7 pct

Andrew Gombert/PAP/EPA

The Fitch ratings agency has raised its projection for Poland's 2021 GDP growth to 5.7 percent and kept its 2022 estimate at 4.5 percent, the agency said in a report published on Thursday.

Fitch noted that the Polish economy had rebounded strongly with GDP growth returning to pre-pandemic levels, unlike the main euro zone economies.

"Stronger than expected GDP growth in Q2 (...) and the revision of Q1 data up (...) means also a revision of our forecasts for the year 2021 to 5.7 percent from 4.4 percent," Fitch wrote.

Fitch referred to its June forecasts, while in the last available Fitch report on Poland, from August 27, the agency wrote that it had raised the 2021 GDP growth estimate to 5.2 percent from 4.4 percent, with estimates of 4.5 percent and 3.8 percent for 2022 and 2023 (unchanged in the latest round of forecasts).

Fitch said Polish consumption had risen robustly although investment remained more variable. The loosening of restrictions in May supported a rebound in domestic demand while recent indicators suggested that growth 'momentum' would be maintained in the second half of the year, Fitch wrote.

Consumer sentiment had also gradually improved, Fitch commented, though research suggested that households' biggest planned purchases for the coming year would remain below pre-pandemic levels.

Disruption to supply chains and increasing incidences of the Delta coronavirus variant may be challenges for the economy in the future, Fitch wrote.

The agency forecasts an interest rate hike by the central bank of 15 basis points by the end of this year and two further 25-basis-point increases in 2022 (putting the reference rate at 0.75 percent at the end of next year), with CPI inflation seen at 4.8 percent at end-2021 and 3.5 percent at end-2022.

In late August, Fitch confirmed Poland's long-term foreign currency rating at 'A-' with a stable outlook.

On October 1, Poland's credit rating will be reviewed by S&P Global Ratings and by Moody's on October 29.

Among the three main ratings agencies, Poland's highest credit rating has been issued by Moody's, at 'A2.' Fitch and S&P both put the country at 'A-,' one level lower than Moody's. All three give Poland a stable outlook.