Poland's Central Statistical Office (GUS) released preliminary Q1 2025 GDP data this week, showing annualised growth of 3.2%. That is marginally above the consensus forecast of 2.9% and continues a pattern of moderate but consistent expansion that has characterised the Polish economy since the post-pandemic rebound settled.
The inflation problem has not gone away
The complication is inflation. CPI for April came in at 4.7% year-on-year — down from the peak of over 18% in early 2023, but still well above the National Bank of Poland's target of 2.5% (with a tolerance band of ±1 percentage point). The NBP's inflation projection for 2025 as a whole, updated in March, anticipates average inflation of around 4.2%, meaning the target will not be met this year.
This has direct implications for interest rate policy. The NBP's reference rate has been held at 5.75% since October 2023, following a cycle of increases that began in late 2021. Markets had been pricing in two rate cuts in 2025, but the April inflation reading — which was higher than expected due to energy price adjustments and an uptick in services inflation — pushed those expectations back. The current market consensus is for the first cut to come no earlier than Q4 2025, if at all.
Consumption is driving growth
The Q1 growth figure was supported primarily by private consumption. Real wages have been growing for several consecutive quarters as nominal wage increases have outpaced inflation, which has given households more purchasing power. Investment is growing more slowly — corporate capital expenditure has been restrained by high borrowing costs, and the public investment pipeline has been delayed by administrative and procurement processes related to the new EU cohesion fund period.
What to watch
The next significant data point will be the May inflation reading, due in early June. If it shows further deceleration toward 4% or below, it would strengthen the case for rate cuts later in the year. If it holds above 4.5%, the NBP will be under pressure to maintain its current stance. The June NBP monetary policy council meeting will be the first opportunity for the bank to revise its forward guidance — the communication from that meeting will be closely watched by markets and by businesses with variable-rate debt exposure.
Poland's growth trajectory is broadly positive, but the inflation overshoot is a genuine constraint on the pace at which monetary policy can ease. That has second-order effects on housing affordability, business investment, and the fiscal cost of debt servicing. It is a more nuanced picture than the headline GDP figure suggests.