Poland's rating affirmed by S&P with stable outlook
August 11, 2014
Standard & Poor’s affirmed its rating at A-/A-2 for long- and short-term foreign currency and A/A-1 for long- and short-term local currency sovereign credit for Poland, with stable outlook on the country’s steady growth prospects, the agency said in a statement issued on Friday.
“The ratings on Poland are supported by its strong, increasingly open, and competitive economy. We estimate GDP per capita at $14,500 in 2014 and expect this to rise consistently on the back of broad-based and balanced economic growth”, S&P said in the statement.
The rating agency forecasts for Poland real GDP growth of 3.1% in 2014, and accelerating to 3.8% from2015, assuming the fallout from the Ukrainian civil war and EU sanctions on Russia remain limited.
The agency believes that domestic demand will be the main growth driver in the medium term.
S&P estimates the 2014 general government deficit at 3.4% of GDP and at less than 3% in following years.
“Given the strong political commitment to exit the European Commission's excessive deficit procedure next year, we forecast deficits in 2015-2017 to remain close to, but below, 3% of GDP,” the rating agency said.
The stable outlook balances Poland's steady economic growth prospects with potential negative spillover effects from external and geopolitical risks.
“In particular, the escalation of economic costs from the Ukraine crisis and/orweaker eurozone performance could disrupt Poland's growth trajectory,” S&P said.
Poland’s rating could be raised if the country’s income levels continue to converge with its wealthier neighbors while external balances remain stable, according to the statement.