The economies of the EU countries are limping more or less, but Poland's indicators are positive: with GDP growth of almost three percent in 2024, the country is ahead of the Community average of one percent, as are the data for the two largest economies in the EU - France and Germany. France's growth is 1.2 percent, while Germany even fell by 0.2 percent.
Poland's development is optimistic this year as well: growth in the second quarter was 0.8 percent, which is the fifth best achievement in the EU. On an annual basis, growth could reach 3.3 percent in 2025, and next year it could increase by another three points. This is not a sudden success: since joining the EU in 2004, the country has had an average annual growth rate of almost four percent.
Stock trading is booming and markets see Poland as one of the most resilient and dynamic economies in the EU. “Poland has definitely achieved enormous success over the past two decades,” economic analyst Katarzyna Żentarzewska told DW. “The gross domestic product (GDP) has doubled. That is extraordinary,” she commented.
Size matters
Economist Jakob Funk Kierkegaard of the American think tank Peterson Institute for International Economics says that successes like Poland's are also evident to some extent in other Eastern European and Baltic countries, but there is one crucial difference - Poland is big. "So at the EU level, this really matters - both politically and in terms of economic weight."
Poland has 37 million inhabitants, it is the third largest in the EU. Its economy, based on GDP, is now approaching the top 20 most developed in the world. As Poland's economic weight grows, so does its strategic and geopolitical importance.
In recent years, the country has significantly increased its defense spending - to 4.5 percent of GDP. A large part of defense spending goes to foreign contracts, not domestic production. According to Żentarzewska, Poland's growth is due not so much to exports as to domestic private consumption, which is the pillar of growth. This leads to low unemployment and, at the same time, to an increase in real wages.
In this way, the country is relatively well protected from external shocks. “If there is a global downturn, smaller, export-oriented economies will naturally be the first to be hit. In Poland's relatively closed economy, consumption will not be affected.”
An example of successful European integration
What is Poland's recipe anyway? Żentarzewska notes in this regard the successful integration into the EU, NATO, the Schengen area and the Organisation for Economic Co-operation and Development (OECD) as keys to success. “If we look at the integration concept as a whole, Poland has really done well.” Although it has not adopted the euro, the country has benefited from European subsidies since joining the EU in 2004. “We cannot deny that access to European funds was a very important factor for growth,” the expert points out.
Kierkegaard agrees. According to him, Poland has “used EU funds to significantly improve its infrastructure. It has managed to completely deal with the corruption that was rampant during socialism. It has also managed to create an attractive business environment and has provided good qualifications for workers. Poland is a great example of successful EU integration".
Political division threatens EU money
However, there are also threats. For the past two decades, Poland has been divided politically between a large right-wing bloc, led by the populist conservative party “Law and Justice" (PiS), and a liberal center-left bloc, currently led by Prime Minister Donald Tusk's coalition.
Tusk's coalition is rather well-intentioned towards the EU, and the victory of his faction in the 2023 parliamentary elections was perceived as a guarantee of securing European money for Poland in the long term, since during its mandate “Law and Justice" has been in constant dispute with the EU over the independence of the judiciary.
The victory of Karol Nawrocki in this year's presidential election - an independent eurosceptic supported by “PiS” - is, however, seen as potentially damaging to Poland's relations with the EU.
Just weeks after taking office in 2023, Prime Minister Tusk was able to convince the European Commission to provide €137 billion in stimulus funds if Poland's legal system was brought back into line with EU rules and regulations. However, his attempts to consider the possible dismissal of judges appointed during the rule of Law and Justice have put him in direct conflict with Nawrocki.
Żentarzewska stresses that Poland has achieved its economic progress despite the political divide between the two blocs. "Poland is a good example of how progress and dynamic growth can be achieved with different political parties or orientations, whether conservative or liberal," she says.
Poland - the new Germany?
It is believed that additional social spending, such as that introduced by Law and Justice, child benefits have proven useful and helped stimulate the economy. But as Żentarzewska also points out, the additional spending, along with the increase in defense spending and the inflationary shock after the pandemic, has led to tensions around Poland's budget.
The estimates of Polish Finance Minister Andrzej Domanski could mean a deficit of 6.5% of GDP in 2026. Banking expert Rafal Benecki explains that due to sustainable growth, rating agencies and investors generally have no concerns about Poland. But he also believes that the country needs a “convincing budget plan to strengthen confidence”.
“Poland will have to face this challenge”, says Żentarzewska. “There will be a need for budget consolidation and savings, which of course can hold back growth.” But she believes that the current confidence is justified. “Low unemployment, consumer confidence and, above all, high productivity - all this contributes to the positive mood and economic success of the country.”
This opinion is also shared by Kierkegaard, who is convinced that Poland can help the rest of the EU a lot in terms of economic dynamism and flexibility. “If we assume that Germany is no longer able to reform, and Poland continues to develop in the same way as it has since joining the EU 20 years ago, it will at some point overshadow countries like Germany.”
Author: Arthur Sullivan