After a rebound in 2024, Poland’s economy is expected to grow even faster in the following year. This growth will be driven by strong consumption and investments but limited by net exports, which are projected to have a negative impact. What else awaits us in 2025?
Polish Zloty in 2024: Strength and Its Challenges
Throughout most of 2024, the Polish zloty remained strong, which was a positive indicator but posed challenges for exporters. The weakening of the zloty, initiated by the U.S. presidential elections, is likely to continue into 2025.
Inflation significantly decreased in 2024 compared to previous years, although it saw a slight uptick in the second half of the year. A mild upward trend is also anticipated for 2025.
Despite these challenges, Poland remains one of the fastest-growing economies in Europe and is expected to maintain this status.
Polish Economy in 2024: Strongest Zloty in 15 Years vs. Declining Employment
The year 2024 brought mixed signals for the Polish economy. Inflation was relatively low compared to previous years, dropping to around 3% in the first half of the year before rising again to 4% in the third quarter. The average inflation for the year is expected to be 3.8%, reflecting moderate price stability.
The labor market presented challenges, with employment declining due to weak economic growth in 2023. Overall, employment in 2024 is projected to fall by 0.3%, primarily due to demographic challenges and a shrinking working-age population.
International trade operated within a relatively narrow range of currency fluctuations. Despite labor market issues and moderate economic growth, the zloty’s stability for most of the year positively influenced trade conditions.
– “In the early months, the zloty remained very strong, reaching its highest value since 2008 by the end of 2023. This stability supported trade throughout most of the year. However, in the second half, following the U.S. presidential elections and the strengthening of the dollar against the euro, the zloty began to weaken, partly due to the eurozone’s economic slowdown,” explains Benjamin Avraham, CEO of fintech company Okoora, which facilitates global expansion and currency management for businesses.
Positive Growth Outlook
Despite these challenges, the EY European Economic Outlook report forecasts that Poland’s GDP will grow by 3.1% in 2024 and accelerate to 3.6% in 2025, positioning Poland among the fastest-growing economies in Europe.
What to Expect in 2025
In 2025, the Polish economy will face several key challenges influenced by domestic and international dynamics. One significant factor will be a projected rise in core inflation to 4.7%. This increase will be driven by the lifting of energy price caps and planned excise tax hikes, leading to higher living and business costs. While this represents a rise compared to 2024, inflation will still be moderate relative to recent years.
Employment Concerns
Employment is expected to remain problematic. Despite an anticipated increase in jobs, the growth will not be enough to fully offset earlier declines. Consequently, the labor market will remain stable but lack significant potential for dynamic development.
– “Currency markets are expected to see a weakening of the zloty against major world currencies like the U.S. dollar and the euro. The zloty is forecasted to lose 5-10% of its value on average. This depreciation will be driven by U.S. monetary policy and falling inflation in Poland, which reduces the need for further rate hikes by the National Bank of Poland. This could enhance the competitiveness of Polish exports but also increase import costs,” explains Benjamin Avraham from Okoora.
Source: Manager Plus
