Poland more resistant to trade tensions than regional peers - Moody's

Poland is more resistant to the outcomes of global trade tensions as compared to other Central and Eastern European countries, Moody's lead analyst for Poland Heiko Peters has told PAP.

If the US imposed duties on European cars, this would have a relatively small impact on Poland compared to other countries in the region, Heiko Peters said, adding that if trade tensions should escalate, Poland would also be relatively better off compared to its regional peers.

Commenting on the World Bank's recent downgrade of Poland in the Worldwide Governance Indicators (WGI) ranking, Peters said the move was in line with Moody's institutional assessment of Poland.

Last Friday, the World Bank published its WGI for 2017, a ranking that plays an important role in the rating methodologies of both credit rating agencies, Moody's and Fitch. Poland's assessment declined in five out of six categories. It grew in the category of political stability.

Turning to the Polish judiciary reforms, Peters said that the threats to the independence of the justice system, as seen by Moody's, currently do not affect the inflow of foreign investments or the condition of the Polish economy.

Moody's also expects that Poland will comply with the Court of Justice of the European Union's (CJEU) rulings, Peters added.

On Monday, the European Commission brought Poland before the CJEU in connection with Poland's law on the Supreme Court (SN). The EC has motioned the CJEU for a fast-track procedure against Poland and asked the court to suspend some regulations of the Supreme Court law.

Ultimately, the CJEU may impose a fine on Poland, as evidenced by several past cases, the analyst said.

However, EU sanctions against Poland under the bloc's Article 7 rule of law procedure are quite unlikely due to complicated procedures and the unanimity requirement, Peters noted.

In December 2017, the EC launched the EU Treaty's Article 7 rule-of-law procedure against Poland over justice reforms which, in its opinion, infringed on the independence of courts, and included changes in retirement rules for Supreme Court judges. The procedure could potentially lead to sanctions for Poland, including the loss of its EU voting rights, but all EU countries would have to agree.

On August 14, the EC launched a further step in the procedure by reiterating its view on the illegality of the Supreme Court reforms in a so-called reasoned opinion sent to Poland. At the time, the Commission gave Poland one month to reply to the opinion.