We expect Poland's GDP will reach its pre-pandemic level already this year. Despite the third wave of the pandemic, we expect GDP growth will rebound to 3.4% in 2021. The projections are highly sensitive to the progress in vaccination, which so far remains slow. Poland is eligible for substantial transfers from the EU Recovery Fund, yet absorbing them will require policy effort. Poland's budgetary deficits will remain wide in 2021. Even though the pandemic will weigh on public finances, general government debt remains moderate. Poland's resilient exports and its floating exchange rate allow the economy to adjust to future external shocks. Banks' litigation risks related to the legacy foreign-currency (FX)-denominated mortgage loans are on the rise and may result in
