OECD Economic Outlook, Volume 2025 Issue 2

Poland

The economy is projected to grow by 3.3% this year, 3.4% in 2026 and 2.7% in 2027. With falling inflation, large EU-funded projects and easing financial conditions, household consumption and investment will remain strong next year. Fiscal consolidation and the end of the EU’s Recovery and Resilience funding in 2026 will moderate demand in the following years. Inflation will ease to 2.9% in 2026 and 2.7% in 2027. Greater weakness in the euro area, global trade and deeper geopolitical tensions could weaken growth, while stronger wage growth and labour demand could lead to more inflation.

Monetary policy easing should continue at a slower pace. Although partly attributable to increased defence spending, significant fiscal deficits reflect higher social spending and need to be addressed. To rebuild fiscal buffers and set the debt ratio on a downward path, steady fiscal tightening through both spending and revenue measures should be implemented over the coming years. Implementation of wide‑ranging measures to reduce red tape should continue.

Economic momentum remains strong

Strong GDP growth in the first half of the year was underpinned by household consumption, disinflation and easing financial conditions. This momentum continued into the third quarter of the year, with the flash estimate showing seasonally adjusted year-on-year growth of 3.7%. The services sector performed well but activity in the industry has been weak. There are nevertheless some signs of a turnaround, with an improvement in manufacturing and in the purchasing managers’ index in November. Inflation has receded throughout the year. Annual headline inflation was 2.8% in October, and core inflation stood at 3%. Lower interest rates have helped to ease financial conditions and boost domestic demand.

Poland

1. Data are estimates.

Source: OECD Economic Outlook 118 database.

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Poland: Demand, output and prices

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Export growth strengthened in the second quarter of the year, but the increase of imports was considerably stronger. Exports to the USA represent around 3.5% of total exports. With export demand constrained by rising trade barriers, trade is acting as a drag on activity.

Monetary policy will ease while fiscal policy will tighten

The policy rate has been reduced by 150 basis points since the spring and the easing is assumed to continue gradually, with a further decrease of 75 basis points during 2026-27. The fiscal deficit has remained elevated since the pandemic due to higher social spending, public sector wages and rising defence spending, reaching more than 6½% of GDP in 2024 and 2025. Defence spending is set to reach 4.7% of GDP in 2025 and 5% of GDP in 2027. Fiscal policy will tighten considerably over 2026-27. Next year, consolidation measures include a new bank tax, ‘bracket creep’ in personal income taxation, increases in excise taxes and a nominal freeze of family benefits. The general government deficit will narrow only modestly due to the increases in defence spending. General government gross debt as a share of GDP is projected to increase by more than 10 percentage points between 2024 and 2027. Near-term growth should be helped by robust public investment, supported by EU funds.

Strong growth will moderate in 2027

GDP growth will reach 3.3% this year, 3.4% in 2026 and moderate to 2.7% in 2027. Private consumption will remain solid, as will public investment, supported by the EU funds and increased defence expenditures. Fiscal consolidation measures and weak trade will act as a drag on growth. Annual headline inflation will moderate to 2.9% in 2026 and 2.7% in 2027, falling within the central bank’s target range. Risks are broadly balanced. On the upside, inflation pressures could prove stronger than assumed if strong wage growth persists. Spillovers from defence spending could add to GDP growth. On the downside, greater weakness in the euro area and global trade, deeper geopolitical tensions and delays in the implementation of the EU funds could weaken growth.

Fiscal consolidation is needed, along with reforms to boost productivity and skills

The easing of monetary policy should continue at a gradual pace as inflation stabilises around the target and takes into account underlying inflation pressures. Steady fiscal consolidation, planned until 2028, is ambitious, and could lead to slippage. Measures should include increasing property and environmental taxation as well as comprehensive spending reviews. To increase fiscal transparency, continued reliance on off‑budgetary funds should be phased out. Plans for the launch of the fiscal council next year are welcome. In addition to the planned consolidation, a long-term plan is required to finance the higher level of defence spending, address ageing costs and the climate transition on a sustainable basis. Implementation of measures to streamline business regulations and cut red tape for entrepreneurs, such as digitalisation of public proceedings, should continue. Given population ageing and wage pressures, greater upskilling and increasing the statutory retirement age could help to keep more people in the labour market.