The Polish economy should be “relatively resilient to the shock from the COVID-19 pandemic,” Fitch Ratings said on March 27, as it affirmed Poland's long-term foreign-currency Issuer Default Rating (IDR) at A- with a stable outlook.

Poland has a “diversified yet relatively closed economy, moderate tourism sector, net energy importer status, flexible exchange rate, a current account close to balance and some degree of fiscal space to accommodate expansionary fiscal measures,” Fitch said in a rating update.

“The pandemic will have a significant negative impact on Poland's real GDP growth in 2020, although we expect a V-shaped recovery into 2021,” Fitch also said.

The rating agency expects Poland’s economic growth to ease to 1.8% in 2020 from a previous forecast of 3.3%. A V-shaped recovery should follow in 2021, however, with the economy expanding 3.2% driven by personal consumption and investment rebound.

That said, risks to the 2020 forecast are on the downside given uncertainty over the duration of the lockdown and the ultimate extent of the pandemic in Poland and globally, according to Fitch.

Impacted by the outbreak and the extraordinary measures undertaken by the Law and Justice (PiS) government to limit the adverse effects of the epidemic, Poland’s fiscal deficit will increase from 1,5% of GDP to 5% of GDP in 2020, Fitch said.

Last year's heavy pre-financing of 2020 borrowing needs and a concomitant drawdown in deposits this year will increase the general government debt to GDP ratio from 50.3% in 2019 to 54.3% in 2020, according to Fitch. That will decline to 52.1% in 2021.