Standard & Poor's Ratings Services has affirmed its 'A-/A-2' long- and short-term foreign currency and 'A/A-1' long- and short-term local currency sovereign credit ratings on Poland. The outlook is stable. It forecasts Poland's GDP growth at 2/8% in 2014, 3.5% in 2015, 4.0% in 2016 and 4.2% in 2017.
The rating on Poland is supported by its strong, increasingly open and competitive economy, the agency explained. It estimates GDP per capita to be just over USD 14,000 in 2014. The Polish economy benefits from a floating exchange rate regime and deep domestic capital markets that permit the government to finance itself in local currency at long-dated maturities.
Although S&P anticipates that implementing pension reform and a recent cabinet shake-up will introduce some policy uncertainty and volatility in the run-up to the 2015 parliamentary elections, it does not view this as evidence of a significant divergence from the economic policies that have resulted in a stable macroeconomic environment.
Pension reform will slightly reduce short-term pressures on tight public finances by increasing headroom under the constitutional public debt limit. The agency expects that changes in fiscal rules--including lower activation thresholds--that have been brought in as Poland reduces its debt stock, combined with increased risk aversion and market scrutiny, will limit any slippage.
It expects pension reform to reduce the government's net debt burden by about 8% of GDP to 46% in 2014. However, the government's implicit pension liabilities will simultaneously increase by a similar amount.
S&P also said it expects Poland's current account deficit to be about 2.5% of GDP in 2014 and 2015, mainly financed by improving foreign direct investment (FDI) flows.