S&P on Weaker GDP Growth: Could Complicate Euro Adoption

The persistently weak GDP growth of countries in the CEE region may complicate their fiscal consolidation plans, especially where fiscal prospects are already bleak due to, among other things, generous transfers and defense spending, S&P Global Ratings said in a report released on Monday.

"GDP growth in most CEE economies slowed in the first half of 2025 due to uncertainty affecting consumer and business confidence, slow absorption of EU funds, and the continued weakness of the German economy. Continued weak growth is likely to complicate fiscal consolidation plans of CEE governments, which already face one of the weakest fiscal prospects in the EMEA region (due to generous social transfers and increased defense spending) and complications stemming from election cycles and a fragmented political landscape," S&P wrote in the report.

"Most CEE sovereign ratings have stable outlooks, reflecting our expectations for medium-term GDP growth, limited balance of payments risks, gradual disinflation and cautious monetary easing, and moderate public debt. However, global trade and geopolitical uncertainty are worsening the outlook for CEE countries. The outcomes of US-EU trade negotiations remain uncertain, and the intensity of the conflict between Russia and Ukraine remains high," the report added.

The table included in the report shows that S&P forecasts GDP growth for Poland in 2025 at 3.3% and in 2026 at 3.1%, and the general government balance at -6.2% of GDP and -5.2% of GDP, respectively, with sector debt at 60.2% of GDP and 63.7% of GDP.

Of the three largest rating agencies, Moody's rates Poland's creditworthiness the highest, at "A2." Poland's rating according to Fitch and S&P is "A-," one level below Moody's. The outlook for all ratings is stable. (PAP Biznes)

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