Economic Outline

Economic Indicators

Poland’s economy has outpaced the EU average in recent years, driven by strong fundamentals and timely macroeconomic policies. Fiscal and monetary support mitigated the impact of the pandemic and Russia’s full-scale invasion of Ukraine in 2022. The IMF estimates that Poland's economic growth accelerated to 2.8% in 2024, driven by strong private consumption from wage growth and lower inflation. However, net exports dragged on growth as rising imports outpaced exports amid weak Euro Area demand. Growth is projected at 3.5% in 2025 and 2026, supported by NGEU fund absorption, but is expected to moderate below 3% in the medium term due to population ageing.

The fiscal deficit is estimated to have widened to 5.9% of GDP in 2024, driven by a moderately expansionary fiscal stance (0.3% of GDP). This was due to permanent increases in public sector wages and social benefits, which outweighed savings from reduced energy support costs. The deficit is expected to remain elevated in 2025 at 5.6% of GDP, partly due to high defence spending. Authorities have announced plans for fiscal consolidation over the medium term, aiming for a deficit of 2.9% of GDP by 2028. The IMF projects that, based on identified measures, the deficit will decline to 3.5% of GDP, with public debt stabilizing around 65% of GDP. Inflation has significantly declined from 2023 but remains above the central bank's target despite a tight policy stance. Core inflation was still high due to strong wage growth in a tight labour market (at 3.8% in 2024, down from 11.4% one year earlier). Both core and headline inflation are expected to peak before mid-2025 and then moderate to around the upper end of the target range of 2.5±1% by the end of 2025. The financial system remains resilient, and private credit is recovering slowly. Capital and liquidity buffers are well above regulatory requirements, and asset quality has improved. Bank profits have risen due to wider net interest margins, with high liquidity keeping deposit rates subdued. Private sector credit has started to recover since bottoming out in mid-2023, partly due to a subsidized mortgage scheme.

The unemployment rate has been structurally low in recent years (around 3%), though around one in four employees have temporary contracts, twice the EU average. The labour market has proved resilient to the crisis, although emerging labour shortages could act as a significant drag on employment growth in the near future. However, employment decreased in the first half of 2024 following the weak economic growth. As a result, the unemployment rate increased to 3.2% in 2024 (from 2.8% the previous year) and should remain stable over the forecast horizon. In 2024, Poland's GDP per capita (PPP) was USD 54,498, 15 % lower than the EU-27 average, though the gap has been narrowing in recent years (IMF data).  Finally, there are still large disparities between the east and the west of the country.

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