“Poland’s economy is increasingly approaching the limits of its existing development model,” says Mariusz Zielonka, Chief Economist at the Lewiatan Confederation. In 2025, Poland’s GDP grew by 3.6%, one of the best results in the European Union. However, rising labor costs, a shrinking workforce, and lower investment levels than in other countries suggest that further growth based on cheap labor and EU funds will be difficult to sustain.
“We are going through a transformation, and this is visible in companies and in the way they behave, including how they respond to what is happening in the world and what strategies they adopt for the future. As an economy, we can see a certain wall ahead of us — in fact, several walls that stand before us in the near future. Whether we avoid those walls or collide with them will depend on the decisions being made right now,” Mariusz Zielonka said in an interview with Newseria during the spring edition of the European Forum for New Ideas.
Although business conditions have improved in recent months, companies remain cautious about investment. In April 2026, the Polish Economic Institute’s Monthly Business Climate Index rose to 103.6 points, confirming a recovery in demand. At the same time, the investment indicator remains significantly lower, at 71.3 points. This means firms are still holding back on development decisions. Investment levels in Poland are also lower than in the European Union overall. According to the Polish Economic Institute, based on Eurostat data, investment amounts to around 17% of GDP, compared with an EU average of about 21%.
“For the past 35 years, Poland’s economy has based its development on low labor costs, cheap and available workforce, and European funds. That model is being exhausted. Labor costs have increased by 40% over the last four years. This is a very rapid increase compared with the rest of the European Union,” says Mariusz Zielonka.
Poland’s unemployment rate remains at around 3%, one of the lowest levels in the European Union, which means the labor market is close to full utilization of available resources. At the same time, the fertility rate remains one of the lowest in Europe, at around 1.16, so the population is steadily declining. In practice, this means that further economic growth will increasingly depend on productivity rather than on employment growth.
“There are fewer and fewer workers on the labor market. We are very quickly entering a period in which companies and businesses must make certain changes, largely technological ones, that will raise productivity without increasing the final price of the product or service,” argues the Chief Economist of the Lewiatan Confederation.
Although Poland is among the leaders in labor productivity growth, the gap compared with the most developed economies remains significant. Data from the Polish Economic Institute and Eurostat show that between 2015 and 2025, productivity increased by 34%, giving Poland second place in the EU. However, in 2024 it still stood at only 66.4% of the EU average, placing Poland fourth from the bottom in that respect. According to European Commission forecasts, this figure is expected to rise to around 72% by 2027.
“The current economic model must be transformed. Ideally, this should be supported by the government — and by a government that does not necessarily think only in terms of the next election. The strategy for change should be long-term and highly specific in terms of priorities,” says Mariusz Zielonka.
Over the past two years, one of the government’s top priorities has remained defense investment. Poland is among the NATO countries with the highest defense spending — in 2025, it amounted to nearly 5% of GDP. If used properly, these expenditures could support the development of the domestic economy.
“We need a good idea of how to use these funds so that they remain in the Polish economy. As the deficit rises, company revenues nonetheless increase. The deficit — that is, money borrowed by the government — translates into higher corporate profitability and supports the Polish economy,” the economist says.
In the spring edition of its World Economic Outlook, the International Monetary Fund indicated that increased defense spending can stimulate economic activity in the short term. So far, the rise in such spending in Poland has translated only moderately into economic growth, which may be due to the fact that a large share of orders has gone to other countries, especially South Korea and the United States, because of limited domestic production capacity.
“We must do everything we can to ensure that funds — whether from SAFE or domestic sources — remain in Poland and in Europe, as the European Commission itself suggests,” emphasizes Mariusz Zielonka.
The European Union’s share of global GDP has declined in recent years and, according to Eurostat, now stands at less than 15%. European countries also invest far less in technological development than other global players. Spending on research and development in the EU averages around 2.2% of GDP, compared with about 3.4% in the United States. One of the problems identified, among others, in Mario Draghi’s report, is the excessive bureaucracy and overregulation of the EU economy. More than half of EU SMEs, which account for the majority of jobs in the Union, report administrative burdens or regulatory barriers.
This is confirmed by the Polish Economic Institute’s report Investment Activity of Polish Companies, which shows that entrepreneurs struggle with frequent changes in legislation and tax interpretations, as well as new reporting obligations. These factors not only increase uncertainty but also impose additional risks and costs. Legislative risk makes it more difficult for companies to make long-term decisions, including investment decisions.
“The biggest weakness, clearly defined and highlighted by the European Commission, is overregulation. Not only are we trying to regulate a great many areas, but Polish law, in trying to adapt to EU law, ends up regulating even more and even more heavily. This makes life harder for entrepreneurs, but it also affects how citizens perceive the Polish economy,” the economist stresses.
Poland ranked 35th out of 38 OECD countries in the 2025 International Tax Competitiveness Index, which assesses the transparency of tax systems. According to the Barometer of Law, published regularly by Grant Thornton, in 2024 and 2025 the number of new legal provisions increased by several thousand pages annually, while in the previous decade there were years when that number exceeded 30,000 pages.
Experts discussed the challenges of economic transformation, the search for a new development model, and the construction of a more resilient and innovative economy during the opening of the EFNI Spring 2026 conference, organized by the Lewiatan Confederation.
