September brought a positive surprise for the real sector of the Polish economy – especially in industry. After a summer slowdown, where industrial output rose by 0.7% year-on-year in August, growth accelerated sharply to 7.4% year-on-year in September, significantly above market expectations (4.6% y/y). Moreover, after adjusting for seasonal factors, industrial production increased by 4.1% between August and September, while the seasonally adjusted one-base index reached an all-time high of 115.4.
The industrial growth structure was led by manufacturing (up 8.2% y/y, compared to 1.1% y/y in August) and showed broad improvement across both export-oriented sectors and those focused on the domestic market. Of note was a substantial increase in new industrial orders placed in September, especially export orders (up 9.8% y/y and 12.1% y/y respectively). The rise in output has been accompanied by a steady improvement in industrial sentiment as measured by the PMI, which could signal the end of a prolonged period of stagnation.
Construction and Retail Also Show Strength
Positive signals also came from the construction sector, which rebounded after an unexpected dip in August. With median forecasts projecting a decline of -2.3% y/y, construction and assembly production instead rose by 0.2% y/y in September, and by 2.6% month-on-month after seasonal adjustment.
Retail sales continued their upward trend as well. In September, the annual growth rate of retail sales volume accelerated to 6.4% y/y, up from 3.1% y/y in August, confirming the expected recovery in consumption (consensus: +6.8% y/y). Although seasonally adjusted retail sales fell by 0.6% compared to August, they remained 4.9% higher than in September 2024. Importantly, annual growth was recorded across all categories – led by clothing and footwear (+20.5% y/y), furniture, consumer electronics and home appliances (+16.1% y/y), and automobiles (+15.0% y/y). Fuel sales also rose dynamically (+7.1% y/y). The sustained demand for durable goods indicates strong consumer confidence, as confirmed by household sentiment surveys.
Inflation Under Control
Inflation in Poland continues to slow. According to the flash estimate by Statistics Poland (GUS), consumer prices rose by 2.8% y/y in October – down from 2.9% y/y in September and below the median forecast of 3.0% y/y. The main driver of the surprise was food prices, whose growth rate decelerated to 3.4% y/y in October from 4.2% y/y in September. We estimate that core inflation also contributed significantly, likely falling to around 2.9–3.0% y/y – its lowest level since late 2019.
As predicted, the disinflationary process is proceeding smoothly, supported by a strong Polish złoty, favorable global commodity and producer price trends, and weakening wage pressures. In the near term, we expect CPI inflation to remain within the permissible fluctuation band around the National Bank of Poland’s (NBP) inflation target. This, coupled with November’s interest rate cut by the NBP, could pave the way for further monetary policy easing. According to NBP analysts, there is a 50% probability that inflation will range between 1.9–4.0% in 2026, and 1.1–4.1% in 2027.
Investment Momentum Returns
Third quarter data suggests that the Polish economy has picked up steam. We estimate that real GDP growth accelerated to 3.7% y/y in Q3, up from 3.3% y/y in Q2. In our view, private consumption will remain the main driver of growth, supported by rising real incomes amid falling inflation, along with lower interest rates and improving consumer confidence. Investments are also expected to have performed better than in Q2, as evidenced by the sharp acceleration in industrial production – particularly in capital goods.
For the full year 2025, we see the potential for GDP growth of around 3.6%, with similar momentum likely to carry into next year. These projections are consistent with NBP’s latest forecasts. In its November outlook, the central bank estimates with 50% probability that real GDP growth will fall in the 3.1–3.8% range in 2025 and 2.7–4.6% in 2026, with midpoints of 3.45% and 3.65% respectively.
Source: ceo.com.pl
