Poland: Economic and Political Overview
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Poland has emerged as a dynamic market over the past 25 years and has become a major actor within Europe, being the tenth-largest economy in the EU. The country recovered well from the global Covid-19-induced crisis, with GDP returning to its pre-pandemic level already in the second quarter of 2021. In 2022, the Polish economy grew an estimated 3.8% with industrial output and retail sales expanding at a solid pace in the first semester of the year. Private consumption also grew, partly boosted by Ukrainian refugee spending and by the recovery from the pandemic, but investment slowed sharply. Economic growth is set to turn negative at the beginning of 2023 due to elevated cost pressures and increasing financing costs. However, private consumption is expected to remain strong and overall growth should pick up over the year, with the IMF expecting GDP growth to enter positive territory (+0.5%). In 2024, the easing of supply bottlenecks should support exports, with growth forecasted at 3.1%.
An expansionary fiscal policy and income tax cuts lead to an increase in the general government deficit in 2022, estimated at 4.2% of GDP (was 3.1% one year earlier). The measures taken to mitigate the impact of rising energy prices included the lowering of VAT rates, cash heating subsidies to households, and a multi-annual support scheme for energy-intensive industries and weighted for around 2.1% of GDP. Despite a multi-annual programme of investment in defence that should increase spending in this area up to 3% of GDP per year, the IMF sees a lower budget deficit in 2023 (3.7% of GDP). The country’s debt-to-GDP ratio is relatively low and was estimated at 48.7% in 2022. It is forecast to decrease further this year (to 45.1%) before picking up again in 2024 (46.2% - IMF). Rising energy prices, growing demand and supply-side bottlenecks have contributed to a steady and robust hike in inflation, which reached a record-high level of 13.8% in 2022. Continued wage growth, the pass-through of elevated energy prices, and significant policy support are set to continue fuelling core inflation, which is projected at 14.3% in 2023, before it decelerates to 4.3% towards the end of 2024.
The unemployment rate has been structurally low in recent years (just above 3%), though around one in four employees have temporary contracts, twice the EU average. The labour market has proved resilient to the crisis, although emerging labour shortages could act as a significant drag on employment growth in the near future. In 2022, minimum wage rises and tax changes associated with the “Polish Deal” fiscal stimulus programme added to wage pressures but partly helped households purchasing power. Nevertheless, the European Commission warns that a higher-than-expected increase in inflation arising from supply constraints and labour shortages may weigh on purchasing power and private consumption growth. The average unemployment rate stood at 2.8% in 2022 and is seen to increase only slightly over the forecast horizon, to 3.2% this year and 3.4% in 2024 (IMF). The GDP per capita (PPP) of Polish citizens was USD 42,466 in 2022, still 21.3% lower than that of the EU-27 (data IMF). Finally, there are still large disparities between the east and the west of the country.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 599.46 | 679.52 | 688.30 | 748.89 | 800.48 |
| GDP (Constant Prices, Annual % Change) | -2.0 | 6.8 | 4.9 | 0.3 | 2.4 |
| GDP per Capita (USD) | 15,793 | 17,958 | 18,280 | 19,913 | 21,315 |
| General Government Balance (in % of GDP) | -6.5 | -1.8 | -3.9 | -4.4 | -3.8 |
| General Government Gross Debt (in % of GDP) | 57.2 | 53.8 | 49.6 | 50.7 | 51.7 |
| Inflation Rate (%) | 3.4 | 5.1 | 14.4 | 11.9 | 6.1 |
| Unemployment Rate (% of the Labour Force) | 3.2 | 3.4 | 2.9 | 3.2 | 3.5 |
| Current Account (billions USD) | 14.88 | -9.49 | -21.69 | -18.08 | -16.97 |
| Current Account (in % of GDP) | 2.5 | -1.4 | -3.2 | -2.4 | -2.1 |
Source: IMF – World Economic Outlook Database, October 2021
In Poland, agriculture employs 9% of the active population and contributes about 2.2% of GDP (World Bank, latest data available). More than 60% of Poland’s total land area is taken up by farming, and the country is generally self-sufficient in terms of its food supply. The sown area in 2021 was 10.9 million ha, the main crops being rye, potatoes, beetroot, wheat and dairy products. Poland also breeds pigs and sheep in livestock farming. The country is relatively rich in natural resources and the main minerals produced are coal, sulphur, copper, lead and zinc. According to the Polish Agricultural Market Agency (ARR), there are roughly 1.5 million small family farms of less than 9 ha in the country, and the average area of agricultural land of farms amounts to 11.1 ha. Around 20,000 farms use organic farming production methods (Statistics Poland – latest data).
The industry sector comprises 27.9% of GDP and employs 32% of the workforce. The World Bank estimates that the manufacturing industry's value-added accounts for 17% of the Polish GDP (latest data available). The country's main industrial sectors are machine manufacturing, telecommunications, environment, transport, construction, industrial food processing and IT. Some of the traditional sectors have been in decline, such as the steel and shipbuilding industries. The Polish automobile industry is mainly export-oriented and had been highly resistant to the effects of the 2008 economic crisis; however, it has been the worst-hit domestic sector in the coronavirus pandemic (also due to the chip shortages). In recent years, the country has diversified its manufacturing industry, developing sectors such as electrical appliances and clothing production. According to the latest yearly data by Statistics Poland, the value of sold production of industrial products increased by 23% y-o-y in 2021, with that of the gas sector, in particular, growing by 115%.
The tertiary sector represents 56.9% of GDP, employing about 59% of the active population. The sector has been booming in recent years, especially for financial services, logistics, IT and tourism; this one, in particular, has seen impressive growth: after declining due to the COVID-related restrictions, the sector recovered quickly and in the first half of 2022 Poland recorded 14.7 million overnight stays (of which 2.3 million regarding foreign tourists), up by 177.1% compared to the same period one year earlier. Concerning the banking sector, it is made up of 30 commercial banks (of which 8 are controlled by the State Treasury, accounting for 41.1% of the sector’s total assets), 511 cooperative banks and 37 branches of credit institutions (European Banking Federation).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 9.1 | 32.1 | 58.7 |
| Value Added (in % of GDP) | 2.2 | 27.9 | 56.9 |
| Value Added (Annual % Change) | -11.1 | 3.4 | 8.9 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Latest Update: November 2023
