Solid GDP Growth in Poland in 3Q25 Amid Rising Investment
INGThe StatOffice revised third-quarter GDP growth to 3.8% YoY from the previously reported 3.7% and released details on its composition. Seasonally adjusted data points to 0.9% quarter-on-quarter expansion vs. 0.8%QoQ in the previous quarter, indicating that buoyant growth momentum observed in recent quarters has been maintained.
Growth maintained solid momentum in 3Q25
The StatOffice revised third-quarter GDP growth to 3.8% YoY from the previously reported 3.7% and released details on its composition. Seasonally adjusted data points to 0.9% quarter-on-quarter expansion vs. 0.8%QoQ in the previous quarter, indicating that buoyant growth momentum observed in recent quarters has been maintained.
Consumption is not booming, but investment (mainly public and imported) is strong
Domestic demand advanced by 3.7%YoY in 3Q25, mainly on the back of robust total consumption that accounts for around 80% of GDP. Quite surprisingly, public consumption growth (7.4%YoY) was stronger than households' consumption, which moderated to 3.5%YoY from a strong 4.5%YoY in the previous quarter.
The dynamics of disposable income moderated this year compared to an exceptionally strong 2024, but the solid growth of nominal wages, combined with lower inflation and lower marginal propensity to save, has supported private spending. As a result, household consumption growth is still likely to surpass the 2024 figure.
Still, we cannot describe current developments as a consumption boom, supporting expectations for consumer inflation to stabilise ahead. This marks a clear shift from pre-pandemic business cycles, when consumption growth outpaced GDP and hovered around 5-6%, rather than the current 3-4%. This time, both expand hand in hand.
Fixed investment growth was surprisingly robust (7.1%YoY), but most likely mainly in the public sector (including defence equipment purchases), as data on investment outlays in large enterprises did not point to any significant improvement in this area.
In the coming quarters, investments should be supported by the lower cost of credit following the National Bank of Poland (NBP) rate cuts, and projects co-financed with the Recovery and Resilience Fund (RRF). The change in inventories knocked off 1.0 percentage point from annual GDP growth in 3Q25, while it contributed 1.0 percentage point in the previous quarter.
Exports surprised to the upside despite stagnant Germany
Net exports contributed 0.2 percentage points to economic growth in 3Q25 as the surplus in the trade balance increased. Exports of goods and services rose by 6.1%YoY, while imports increased by 5.9%YoY. Exports performance was a positive surprise, especially given stagnation in the German economy, Poland's main trading partner.
Services continue to propel economy, while industry is gradually recovering
Gross value added grew by 3.4%YoY. The improvement in industry is noteworthy as its value added rose by 4.9%YoY versus 1.8%YoY in 2Q25. Construction was still nearly stagnant (+0.3%YoY vs. -0.2%YoY in 2Q25).
Growth in trade and repairs slowed slightly (4.3%YoY vs. 5.9%YoY in the previous quarter), but robust growth was still reported in professional activities that include some share services. Other service sectors like transport and logistics also posted strong growth (5.3%YoY).
October data indicate a strong start to Q4 for Poland, with prospects for a gradual recovery in construction and continued industrial growth. However, services remain the main driver of expansion.
GDP growth of 3.5-4.0% in 2025-26, supported by RRF
Our forecasts suggest that GDP growth in 4Q25 will be slightly higher than in 3Q25. We still assume that GDP growth will be around 3.5% YoY in 2025. We had expected 2026 growth to be similar to 2025, but given the strong end to this year, we are now expecting growth to fall within the 3.5-4.0% range.
The key will be maintaining consumption growth and improving investment, linked to the implementation of projects under the National Recovery Plan (KPO), which will formally close next year, although it may still boost investment and consumption in early 2027. This is the main difference between our forecasts and the consensus. We assume that some KPO projects will still be carried out in 2027, which will help to "smooth out" the public investment boom before the final deadline for fund disbursement at the end of 2026.
Inflation should remain low and there is still room for cutting rates to 3-3.50% in 2026
We assume that better economic conditions will be accompanied by a further decline in inflation. At present, we do not see any pressure from core goods prices (cheap imports from China), commodity prices (weak US dollar / the possible lifting of sanctions on Russia) or food, and core inflation should continue to fall, partly thanks to slowing wage growth.
Ahead lies a period of solid growth with an economy balanced externally (low current account deficit) and internally (inflation close to target). A high budget deficit is not creating demand pressure due to a still high savings rate and significant contribution from defence imports. What needs adjustment is the overly expansionary fiscal policy. It would be desirable to increase the role of the private sector in generating investment.
Poland's economy continues to surprise, growing faster than most of the EU, yet it stands a good chance of maintaining low inflation in 2026 and further interest rate cuts.
