IMF Staff Country Reports

The 2024 Article IV Consultation discusses that the Polish economy is recovering, driven by a rebound in domestic demand. Private consumption growth is being driven by rising nominal and real wages, and lower inflation; still, inflation remains well above target against a tight labor market. The outlook is positive, supported by the absorption of Next Generation EU (NGEU) funds, with growth expected to accelerate further in 2025–2026. Absent surprises, inflation should peak before mid-2025, and then moderate to slightly above the upper end of the central bank’s target range by end-2025. Medium-term growth is expected to moderate as the impact of NGEU funds absorption unwinds. Nevertheless, there is substantial uncertainty with risks tilted to the downside for growth and upside for inflation. The overarching objective is to balance the mix of monetary and fiscal policy and preserve debt sustainability, while strengthening the economy to face longer term challenges. Growth engines that delivered past success in convergence to EU income levels are threatened by diminishing cost-competitiveness, population aging, limited capital deepening, and the climate transition, on top of a subdued growth outlook in the main trading partners.