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WARSAW, Feb 6 (Reuters) - Poland's economy could suffer if it sees a reduction in European Union funds after 2021, Fitch Ratings lead analyst on Poland said on Tuesday.
Arnaud Louis also told reporters that increased tensions between the EU and Poland on a range of issues including Warsaw's overhaul of its judiciary had so far not had much impact on investment.
"Rising intra-EU tensions and Brexit could lead to cuts in EU funds for the next budget cycle. This could affect especially countries that are key beneficiaries of EU funds, including Poland," Louis said.
"We consider this a potential risk to growth and public finances beyond 2021."
Poland is a major beneficiary of EU funds for infrastructure and agriculture under the EU's current multi-year budget but the impending departure of Britain, a net donor country, will leave a hole in the bloc's finances.
Poland's economy grew by 4.6 percent in 2017, supported by a 5.4-percent rise in investment.
"One conclusion that we can draw from (these figures) is that the tensions with the EU did not appear to have much impact on investment," Louis said.
"Continued high GDP growth, supporting income convergence towards the median for A rated sovereigns, could potentially trigger a positive rating action," he said.
Fitch rates Poland at A- with a stable outlook. Its peer S&P Global rates Poland one notch lower at BBB+, while Moody's has it one notch higher at A2, both with a stable outlook.
Fitch Ratings' base case is for the central bank to tighten monetary policy in 2018 as inflation accelerates, the analyst said.
"Failure to tighten in a timely fashion could undermine macroeconomic stability," Louis said.
Analysts polled by Reuters expect the Polish central bank to raise the benchmark rate from its current all-time low of 1.50 percent in the first quarter of 2019.
(Reporting by Marcin Goettig; Editing by Gareth Jones)
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