Polish GDP expanded 3.7% year on year in the fourth quarter (chart), picking up sharply versus a revised gain of 2% y/y in the preceding three months, seasonally adjusted data from the Central Statistical Office (GUS) showed in a flash estimate on February 13.

The data appear to show that the Polish economic recovery is back on track of sustained growth, analysts say. “Based on available data, we estimate that the main driver of the economy in the last quarter of last year was household consumption, helped by low unemployment and rapidly growing real disposable income,” Bank Millennium said in a comment.

Still, consumption was likely below the potential suggested by the hot labour market and growing wages, as households would save amidst uncertainty about inflation and geopolitics. 

Details of the GDP structure will be published at the end of February.

In seasonally adjusted quarterly terms, the economy added 1.3% in Q4, following a revised gain of 0.1% quarter on quarter in July-September, GUS data also showed. Unadjusted, annual GDP growth rate picked up to 3.2% y/y in the fourth quarter after an expansion of 2.7% y/y in the preceding three months.

Analysts say that growth momentum will remain at Q4 levels in 2025. “We assume that in 2025 economic growth will accelerate to around 3.5% from 2.9% in 2024 driven by investment in addition to consumption,” PKO BP said.

“We expect this year to be a turning point for investment, driven by the rollout of spending from the National Recovery Plan (KPO) and an acceleration in the use of cohesion funds. Another key factor fuelling investment will be defence procurement,” ING said.

Some PLN60bn (€13.88bn) from the EU’s pandemic recovery fund is expected to reach beneficiaries in 2025, compared with PLN20bn in 2024, with structural funds also accelerating. 

Consumption remains a question mark, however. If households choose to save in 2025 just like they did in 2024, the role of household spending in supporting economic growth could be weaker than projected, ING also said.

Still, Poland’s domestic growth drivers should help it withstand stagnation in the Eurozone and the risks posed by Donald Trump’s protectionist policies.

The GDP data for Q4 does not change much in the monetary policy outlook.

The National Bank of Poland (NBP) will “likely keep rates stable in the coming months, at least until the presidential election,” Bank Millennium said. 

“We see room for rate cuts in the second half of the year, though the scope for reductions is limited to a maximum of 100 basis points. We are also awaiting the NBP’s March [inflation and GDP] projection. This report will be a key factor in any potential revision of the central bank’s interest rate outlook,” Bank Millennium also said.

The NBP’s reference interest rate has remained at 5.75% since October 2023.