THIS SHOULD BE A SIGNIFICANTLY BETTER YEAR

In my opinion, 2026 will be significantly better in terms of economic growth than 2025. That does not mean, however, that from the perspective of many industries it will be an easy year.

We still do not have all the information that could bring us closer to a full assessment of 2025. But with very high probability, the targets set in the budget regarding the improvement of the economic situation were not achieved, especially GDP growth itself, which was supposed to reach 3.9 percent. Although it was, of course, a better year than 2024.
The year 2026 may reverse this situation. The government has assumed GDP growth of 3.5 percent, and in my opinion this is a very conservative assumption. Of course, we face a number of external risks over which we have little control and whose likelihood is difficult to estimate. Just look at what is currently happening in connection with Donald Trump’s latest tariff threats. And incidentally, this is precisely the biggest problem with the current U.S. president. Negotiating new terms of cooperation between the United States and the European Union does not guarantee that Trump will not change his mind after a few months. And a reason will always be found.

Returning to the Polish economy – in my opinion GDP growth may be significantly higher than 3.5 percent. I have already written about this. A “four” at the front is very likely, and I even believe that reaching 4.5 percent is not beyond our reach. And that is exactly the level of growth I am betting on this year. Why? As we know, it was consumption that pulled us out of the stagnation of 2023, when we recorded almost zero GDP growth. We were buying more because wages rose sharply in 2024, while inflation fell, meaning that real wages were clearly increasing, at one point even by double digits. The momentum of consumption remained roughly at the 2024 level also in 2025. And I think it will be similar in 2026. Wage growth has of course slowed compared to 2024, but in my opinion a nominal increase of between 4 percent and 6 percent will be maintained. With very low inflation – and I believe that is what we will see – this will mean additional real funds for purchases. All the more so since interest rates are lower and, in my opinion, will fall further, which means more attractive loans and credit. In any case, the consumption engine of growth should continue to run.

The second engine, which only worked a little in 2025, will be investment. Last year this component was, in my view, mainly responsible for the failure to meet budgetary targets. Delays in investment were largely the result, for example, of bureaucratic delays related to the implementation of the National Recovery Plan. This year we will have to catch up, otherwise we will simply lose part of the funds. We already have many areas at risk. Investments, both private and public, should therefore support economic growth more strongly. Lower interest rates will also help here, especially on the private side. However, in the case of private investment I still lack a sense of stabilization in the business environment. This unpredictability can be seen, for example, in tax matters. Three weeks ago we casually learned, for instance, that the government plans to raise the preferential VAT rate to 23 percent in many areas. Such surprise moves are not something that stabilizes the operating conditions of companies. A full strategy of action is still not visible.

And the third element I would like to point to is exports. We hope that after a slight rebound in 2025, the economy of our largest trading partner will finally accelerate more strongly. Germany recorded a mild recession in 2023 and 2024, and in 2025 probably achieved – we still do not have full-year data – around 0.3 percent growth. I am hoping for clearly above 1 percent growth in 2026. Of course, that is still a weak result, but at least clearly positive. If that happens, we can expect somewhat better foreign sales results for our country.

Importantly, faster growth in 2026 should not trigger higher inflation. The government assumes an annual average of 3 percent in the budget; in my opinion it will be less – somewhere around the inflation target, that is 2.5 percent. If so, on the one hand this will strengthen consumption through rising real wages, and on the other it may allow the Monetary Policy Council to be more courageous in easing monetary policy. The minimum scenario for me is two rate cuts of 25 basis points in the first half of the year, that is half a percentage point in total. But that is the minimum. I believe rates could be safely reduced by a full percentage point over the whole year. But what the Council will actually do is another matter. This does not mean, however, that all industries will be in a good position and all employees can feel secure. For example, outsourcing of services will certainly remain under strong pressure. Especially since automation, not only in the form of advances in AI, will continue to develop. The same will apply to many areas of industry. And we will certainly face pressure resulting from the state of the budget, meaning a search for money wherever it can be found.