This year, Poland is set to become Europe’s economic “top student.” A 4% GDP growth rate will place Warsaw at the forefront of the fastest-growing European capitals.
“Every top student has grades in their report card. The 2026 forecasts for Poland look like an extract from such a card,” comments Ernest Pytlarczyk, Chief Economist at Bank Pekao S.A. “Wage growth? A solid A. GDP dynamics? A B, maybe even a B+. Interest rates? A C+. Inflation? A D, or even slightly below.”
In their annual forecasting report, Pekao economists outline scenarios for Poland and the world, addressing ten key questions representing today’s most vital macroeconomic and market areas.
Global Growth Accelerates, Leaving Europe Behind Despite Fiscal Stimulus
“The global policy mix in 2026 will be expansive; outside of recessions, we haven’t seen such a large percentage of central banks cutting interest rates in years,” says Piotr Bartkiewicz from the Macroeconomic Analysis Department at Bank Pekao S.A. “This year, fiscal expansion will join monetary easing. I expect a positive fiscal impulse in both the US and—crucially—Germany.”
Additional factors supporting the global recovery include falling energy prices (driven by rising LNG supply and declining oil prices) and raw materials (due to moderate economic dynamics in China). However, cheaper energy and generous fiscal packages may not be enough to pull the European economy out of stagnation.
Business sentiment surveys show a consistent decline in how EU companies rate their competitive position. Real currency appreciation (the EUR is up 7% since 2019, while the PLN has surged by 26%) is not helping either. 2026 is unlikely to bring a breakthrough, and the “China shock” will remain a problem for Europeans: a conservative ECB will prevent an exit from the crisis through Euro depreciation, weak public finances will block increased R&D spending, and leaders attempting to balance between China and the US will refuse to increase regulatory pressure on Beijing.
The Chinese Dragon Eats Its Own Tail, but Has Enough Fuel for 2026
“Attempting to avoid a GDP drop due to US tariffs, China has increased competition among its exporters, driving margins to their lowest level in 20 years,” explains Sebastian A. Roy, economist at Bank Pekao S.A. “This way, they managed to maintain GDP dynamics by increasing the trade surplus, but it is only a temporary fix.”
In the long run, China cannot avoid painful economic reforms. Combating the overproduction crisis will require CPI reflation and Yuan appreciation. For now, however, current policies can continue: aggressive export growth via a “race to the bottom” on margins, subsidizing unprofitable enterprises, and maintaining an undervalued Yuan. Only a lack of fiscal space could end this policy, which is not expected in the near future.
Don’t Fear the AI Bubble, but Don’t Count on the “Productivity Fairy”
“An asset bubble is a natural stage of technological development. The 19th-century railway boom and the IT development at the turn of the 21st century brought sharp market corrections, but also lasting productivity growth,” notes Piotr Bartkiewicz. “While Big Tech investments have doubled in two years, stock index growth has been much milder than during the dot-com bubble. The market is evolving harmoniously, and investment leverage is moderate.”
Simultaneously, those expecting a sharp drop in US interest rates due to a productivity shock (as theorized by K. Hassett) may be disappointed. Even in the most optimistic scenario, the 12-member FOMC will likely have no more than six dovish members. This is reflected in market pricing—investors globally expect just over 50 basis points in cuts through 2027.
4% GDP Growth, 5% Wage Dynamics, and Low Inflation
“Investment will accelerate significantly this year, becoming an equal driver of growth alongside private consumption,” predicts Karol Pogorzelski from Bank Pekao S.A. “Primarily, 24 billion EUR from the grant portion of the KPO (National Recovery Plan) will be spent. This is already visible in national accounts and local government investment plans, which are growing by a record 32% year-on-year in 2026.”
“The investment boom in 2026 is a foregone conclusion, but should we worry about the following year? I don’t think so,” adds Wiktor Mrozowski. “Investments in ‘Port Polska’ (formerly CPK) and EU cohesion funds will fill the gap left by KPO subsidies.”
Kamil Łuczkowski argues that this dynamic growth will occur alongside low inflation, well below the target. “Fast growth won’t generate inflationary pressure because the output gap is still closing. Globally, inflation will be anchored by low commodity prices and cheap imports from China. I believe an average annual CPI inflation of 1.9% is within reach for the Polish economy.”
Under these conditions, Pekao expects the NBP reference rate to eventually drop to 3.25%, a more dovish view than the market consensus. However, they believe the window for cuts will close by mid-year as the cumulative effect of monetary policy shifts from disinflationary to pro-inflationary.
The End of the “Employee’s Market”?
“Anchored low inflation is a great omen for the labor market,” says Aleksandra Beśka. While nominal wage growth will slow to just under 6% (down from 8% last year), low inflation means real wage growth will remain solid at 4%. However, she notes that the era of the “employee’s market” in Poland is nearing its end, as unemployment shows a slight uptick due to a higher number of professionally active people that the market cannot fully absorb.
Regarding fiscal policy, Karol Pogorzelski notes: “The peak of fiscal expansion is behind us, but consolidation will be gradual. We don’t need to fear a ‘Romanian scenario’ because our strength lies in macroeconomic balance: a healthy balance of payments, strong growth, and a strong Złoty.”
Potential Peace in Ukraine: Limited Economic Impact on Poland
“The Polish economy has largely become immune to shocks coming from Ukraine,” assesses Sebastian A. Roy. He believes the economic potential of ending kinetic warfare in Ukraine is limited for Poland. The risk premium on Polish assets is not currently high, and Polish-Ukrainian trade has stabilized.
Furthermore, Polish companies will be so busy servicing the KPO investment boom in 2026 that their capacity to participate in Ukraine’s reconstruction may be limited. A mass return of Ukrainian refugees is also unlikely; surveys show that legal and economic conditions in Poland are more significant factors for staying than the situation in their home country.
