In April 2019 Moody's Investors Service has affirmed Poland's A2 long- and short-term rating. Issued rating is based on the key rating drivers, which are the following.
a) Poland' credit strength comes from economic resiliency. Polish growth, scale and wealth of the economy was stable in recent years.
Polish economic strength was assessed as very high due to its stable growth for almost three decades, low vulnerability to changes in external demand and resiliency to the global slowdown. Polish growth trend (3,7%) is one of the highest among regional peers. Amongst the economic threats, there are mentioned the skill shortages caused by ageing of the society and expected moderation of net immigration. The other challenge is lowering the amount of EU funds in the near future, which may result in a lower allocation of cohesion funds. However, the outcome of those factors is positive, as the most important government indicators are considered stable.
b) General government debt profile is not about to change despite the expected fiscal expenditures.
Polish short-term fiscal metrics are improving, with debt-to-GDP ratio gradually dropping. Fiscal debt is low due to the strong nominal GDP and improved tax collection. On the other hand, the fiscal deficit is about to widen due to the pre-election package of the ruling PiS party that announces growth in social spending. It may be partly offset by the implementation of some fiscal measures on the revenue and expenditure.
c) The weakening of the institutional strength due to the recent changes in the judicial system.
The overall assessment of Polish institutional strength is high as the Polish institutional framework is solid and sustained by the membership in the EU. The reliability of the system is supported by inflation targeting and a flexible exchange rate regime. The risk of weakening the institutional strength comes from the recent judicial reforms which undermine constitutional checks, being also a threat for the relation between Poland and the EU.
The mentioned factors indicate Polish stable credit profile, robust growth prospects and the compliance with EU's fiscal rules. Main threats that may lower Moody’s rating in the future come rather from internal politics than an overall economic situation. Poland remains a strong player in the international market and provides good investment opportunities due to the stability of the system and positive economic forecasts.
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