The International Monetary Fund (IMF) Executive Board has concluded its 2024 Article IV consultation with the Republic of Poland, highlighting a range of economic developments and projections for the country.
In 2024, Poland's economic growth is estimated to have accelerated to 2.8%, driven by increased domestic demand, particularly from private consumption. This growth was supported by strong nominal wage growth and lower inflation. However, net exports negatively impacted growth due to higher imports outpacing exports amidst weak Euro Area demand. The outlook remains positive with anticipated absorption of Next Generation EU funds, projecting growth around 3.5% in both 2025 and 2026.
The fiscal deficit widened to an estimated 5.9% of GDP in 2024 due to permanent increases in public sector wages and social benefits outweighing savings from reduced energy support costs. The deficit is expected to remain high at 5.6% of GDP in 2025, partly because of significant defense spending. Authorities plan fiscal consolidation over the medium term targeting a deficit reduction to 2.9% of GDP by 2028.
Inflation has decreased significantly since 2023 but still exceeds the central bank's target despite a tight policy stance. Core inflation remains high amid strong wage growth within a tight labor market context. Both core and headline inflation are expected to peak before mid-2025 and then moderate towards the target range by end-2025.
Poland's financial system is resilient with private credit recovering slowly as capital and liquidity buffers exceed regulatory requirements, while asset quality has improved.
Executive Directors commended "the Polish authorities’ prudent policies that have resulted in impressive economic and social gains" while noting risks such as elevated inflation levels given the tight labor market conditions.
Directors stressed the importance of rebalancing policies to rebuild buffers, strengthen resilience, and encourage private investment-led growth alongside structural reforms addressing productivity challenges from ageing populations and climate transitions.
Fiscal policy should focus on rebuilding buffers while supporting disinflation efforts as recovery becomes more entrenched according to Directors who also emphasized identifying necessary fiscal measures upfront for credibility enhancement.
Monetary policy should remain tight until inflation converges towards targets; interest rate cuts should only commence when wage growth decelerates according to Directors who welcomed recent financial system soundness bolstered by tightened regulations yet cautioned further tightening must consider nascent credit recovery impacts too.
Comprehensive structural reforms fostering sustainable development were underscored alongside policies enhancing capital deepening resource allocation innovation capacity decarbonization aligning EU targets meeting adequate labor supply demands through integrating women older adults refugees into workforce achieving emission reductions safeguarding competitiveness goals set forth among other recommendations made during discussions held between involved parties throughout proceedings conducted under established protocols governing engagements undertaken per stipulated guidelines outlined therein respectively applicable hereunder accordingly stated thus far presented hereinabove aforementioned documentation provided hereto attached therewith corresponding thereto appended subsequently enclosed hereby submitted henceforth referenced below delineated forthwith enumerated thereby included herein enclosed thereof contained hereinafter referred thereby designated explicitly mentioned 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