Poland continues to showcase its strength as one of the fastest-growing economies in the European Union. According to the European Commission’s Autumn Economic Forecast, real GDP is expected to grow by 3.0% in 2024 and 3.6% in 2025, after a modest increase of 0.1% in 2023.
However, recent data and expert analyses provide deeper insights into Poland’s economic trajectory, highlighting both opportunities and risks as the nation navigates a complex global environment.
Recent economic data and mBank’s projections
Poland’s Central Statistical Office (GUS) recently confirmed a GDP growth rate of 2.7% in Q3 2024. Economists from mBank provided further analysis, revealing that private consumption contributed 0.3 percentage points to growth, investments 0.1 percentage points, while exports reduced growth by 0.7 percentage points. They noted that inventory build-ups played a significant role in driving growth, possibly reflecting an unexpected demand slowdown rather than organic economic expansion.
Despite these mixed signals, mBank economists remain optimistic about 2025, forecasting GDP growth of 4%. They point to investments as the primary growth driver, supported by EU-funded projects at both the local and central levels, as well as private sector investments in automation, energy efficiency, and green energy.
Inflation stabilization and monetary easing
One of the most encouraging trends for 2025 is the expected stabilization of inflation. Following a peak of 10.9% in 2023, inflation is projected to average 3.8% in 2024 and temporarily rise to 4.7% in 2025 before declining to 3.0% in 2026. Core inflation, which excludes food and energy prices, is also expected to moderate as wage growth slows. mBank anticipates that this stabilization will allow for monetary policy easing, with Poland’s central bank potentially lowering its benchmark interest rate from the current 5.75% to 4.0% by the end of 2025.
Challenges in exports and consumption
While private consumption remains a cornerstone of Poland’s economic growth, its pace is expected to slow slightly compared to previous years. At the same time, Poland’s export sector faces headwinds from uncertain global conditions, including geopolitical tensions and weaker demand in key markets such as the eurozone and the United States.
The European Commission highlights similar concerns, noting that net exports are likely to have a negative impact on GDP growth in the coming years. Additionally, Poland’s growing defense expenditures, projected to rise from 2.6% of GDP in 2024 to 2.8% in 2025, will contribute to a higher fiscal deficit, adding further strain to the budget.
The role of investments in economic growth
Investments are set to play a critical role in driving Poland’s growth in 2025. EU-funded projects are expected to stimulate infrastructure development and regional growth, while private companies are increasingly focusing on automation, renewable energy, and energy efficiency. However, the European Commission warns that delays in public investment projects, particularly those reliant on EU funds, pose a significant risk to the forecast.
The year 2023 marked the last opportunity to utilize funds from the 2014-2020 EU financial perspective, which explains the lower growth rate for investments in 2024-2025. Nevertheless, Poland’s ability to effectively implement new EU funding programs will be essential for sustaining growth in the medium term.
Avoiding the middle-income trap
Poland’s impressive economic growth has brought it closer to a critical juncture: avoiding the “middle-income trap.” The World Bank’s Middle-Income Trap study highlights the challenges faced by countries transitioning from middle-income to high-income status. For Poland, this will require shifting from reliance on investment and technology infusion to fostering domestic innovation and higher value-added industries.
Poland has already benefited significantly from adopting technologies from Western Europe, but continued growth will depend on its ability to cultivate a highly skilled workforce, increase productivity, and support innovation-driven sectors. Drawing lessons from countries like South Korea, which successfully navigated the transition by balancing investment, technology adoption, and innovation, Poland has the opportunity to position itself as a leader in high-value industries.
