The Fitch Ratings agency increased its forecast of Poland’s GDP growth in 2021 from 3.3 percent to 4.1 percent but has decreased the forecast for 2022 from 5.1 percent to 4.7
“Fitch expects the economy recovery process to be postponed to at least the second quarter when private consumption remains low given careful moods in households. Meanwhile, industrial production and to a lesser extent the construction sector, will remain resistant, therefore we have increased the GDP growth forecast for 2021 by 0.8 percentage points compared to December,” Fitch wrote in its latest report.
The agency explained that delayed demand and investments supported by the European Recovery Fund and the Multiannual Financial Framework will increase GDP growth to 4.1 percent in 2021 and 4.7 percent in 2022.
Net export contribution to GDP growth will be lessened which will be reflected by stronger import growth due to strong domestic investments and consumer demand.
Fitch also forecasts that inflation in Poland by the end of 2021 will be 2.5 percent and 3.5 percent by the end of 2022.
“Inflation pressure will maintain in 2021-2022 due to rising administrative prices and electricity, rising global energy prices, a sugar tax, and the effects of increased domestic demand,” the agency stated.
The report noted that the National Bank of Poland will most likely introduce gradual increases in interest rates but will only start doing so in 2022. The central bank has signalized readiness to intervene on the foreign exchange market to prevent excessive appreciation of the Polish zloty, which was evident in the bank’s activities in December 2020.
In 2022, Fitch forecasts a 20-basis-point increase in interest rates in Poland up to 0.30 percent for the reference interest rate by the end of the period.
Out of the three largest rating agencies, Moody’s evaluates Poland’s credit rating the highest at an “A2” level. Poland’s rating, according to Fitch Ratings and S&P Global Ratings, is ‘A-‘, a whole level lower than Moody’s. The prospective for all current ratings are stable.