Poland's rating supported by good growth prospects - Moody's

Good growth outlook supports Poland's rating, with the country facing a number of credit challenges including a significant structural deficit and a return to fiscal rules after the pandemic, rating agency Moody's wrote in a report dated September 15.

Poland's credit profile is supported by "a large and resilient economy," the agency said.

At the same time, the Covid-19 shock will trigger a recession in 2020 and will result in a temporary deterioration of fiscal indicators, it added.

"Main fundamental credit challenges include a relatively sizable fiscal deficit, medium-term challenges weighing on potential growth and an elevated unpredictability with respect to economic policy," the report read.

On September 11, Moody's did not update Poland's credit rating. This means that the country's long-term foreign currency rating continues at A2 with a stable outlook.

According to the agency, a stable outlook for the rating reflects a balance of risks for the credit profile - on the one hand, solid medium-term growth prospects after the pandemic, and on the other hand, challenges to the country's institutional strength.

Moody's expects the Polish economy to rebound by 4 percent in 2021 after a 3.8 contraction in 2020. Still, risks to forecasts are "unusually high" given elevated uncertainty concerning Covid-19 developments.

Moody's is the author of Poland's highest rating among the three major rating agencies. According to Fitch and S&P, Poland's rating is A-, also with a stable outlook.

Fitch will publish its new rating review for Poland on September 25, and S&P on October 2.