Fitch raises Poland's GDP growth forecast

15:03 | 21/03/2019 Global Economy

The credit rating agency Fitch on Wednesday revised upwards expected GDP growth rates for Poland, following social spending plans announced by the government in February.

The Deepwater Container Terminal in the northern Polish port city of Gdańsk - Photo:

According to Polish State News Agency (PAP), Fitch revised its growth rate forecast for Poland, from 3.8 percent for 2019 and 3 percent for 2020 (announced in December last year) to 4 percent for this year and 3.5 percent for next year.

"We raised our growth forecasts, despite our somewhat worse views on the eurozone economy, due to the pre-election fiscal stimulus of about 2 percent of GDP," the Fitch report wrote.

The agency referred to social spending measures announced by the government, which include expanding the trademark 500+ program to include also families with only one child and paying retired Poles a 13th pension.

The payments are expected to boost consumption, Fitch said, which would partly compensate for the expected increase in imports.

Fitch said the impact of taxation changes announced by the government, which include tax breaks for the youth, was difficult to gauge but likely to stimulate growth.

The agency did not present new predictions on the public finance deficit.

In January, the rating agency forecast the public deficit to reach 1.7 percent of GDP in 2019 and 2.3 percent in 2020.

In March, Fitch warned nevertheless that in 2020 Poland's deficit could reach 3 percent of GDP, if no measure was taken to compensate for the additional social expenditures and in the context of a likely decrease in budget revenue growth.

Under EU rules, member states are not allowed to run deficits higher than 3 percent.

Theo Xinhua