• On October 2, 2020 S&P rating agency announced its decision about keeping Poland’s credit rating unchanged at the level of A-/A-2 for long and short-term liabilities, respectively, in foreign currency, and A/A-1 for long and short-term liabilities, respectively, in local currency.
• Rating’s outlook remained at a stable level.

S&P rating agency in its press release justifying the decision indicates i.a. diversified economy, educated workforce, EU membership, manageable public and private debt, solid external metrics, prudent monetary policy amid the healthy banking system and relatively deep domestic capital markets that underpin Poland’s rating.

According to S&P the pandemic will negatively affect the economy – the agency estimates Polish real GDP to contract by 3.4% in 2020. Simultaneously, the agency points that the contraction will be the smallest in the EU thanks to Poland's relatively diversified and competitive export base, less dependent on the automotive and tourism sectors, as well as the country's sizable emergency policy stimulus to mitigate the fallout from COVID-19. In the agency’s opinion Poland’s fiscal response, one of the largest in Central and Eastern Europe, combined with measures adopted at the EU level, together with regular EU funds, and supported by pent-up domestic demand and recovery in eurozone could further boost Poland's GDP growth, which S&P projects to 4.5% in 2021 and 3.6% in 2022. According to S&P estimation the general government deficit in 2020 will amount to 9.3% of GDP, which is less conservative compared to the government's projection (12% of GDP). S&P projects net general government debt to increase to 58.7% of GDP by end-2021 and stabilize thereafter.

Rating prospects

According to the agency, Poland’s rating could be raised if, following a temporary growth shock, Poland's strong economic performance were to resume and boost its income levels without creating external imbalances. On the other hand, the ratings could come under pressure if the impact of the pandemic materially weakened country's economic recovery and medium-term growth prospects, leading to the government's fiscal position deteriorating significantly beyond the agency’s expectations. Ratings could be also lowered in case of materially weaker EU transfers to Poland, crystallization of fiscal contingent liabilities or the government's increasing share of the financial system.