Poland overview

Enhancing the private sector’s role in the economy. The Polish state continues to play a significant role in the economy, notably in the power, chemical, natural resources, transport and municipal sectors. Accelerating the implementation of the structural reform agenda is crucial to consolidate transition and support the recovery that has slowed markedly. The Polish authorities have acknowledged the need to push ahead with greater market liberalisation. Moving Poland toward a more resilient economic model built on private investment and productivity increases will also require more innovation, providing risk capital and corporate restructuring (operational and financial), and will include supporting Polish companies in their regional expansion and cross-border investments.

 

Assisting in the development of a sustainable financial sector and capital markets. Although the banking system remained sound in the course of the crisis, a number of systemic vulnerabilities emerged, especially banks’ balance sheet mismatches, lack of sponsors liquidity support and the need for consolidation. In the current environment, high risk aversion by banks and deteriorating credit quality in the economy are leading to substantial financing constraints, in particular for small and medium sized companies and in the poorest regions. EBRD will assist in the development of a more sustainable financial sector by helping banks address crisis-inherited vulnerabilities and promoting the development of local currency capital markets in order to reduce the sector’s dependence on foreign financial inflows.

 

As well as being a country where the EBRD works, Poland is also an EBRD donor with €5.5 million of contributions. Poland first became a donor to the EBRD in 2005, contributing to the European Western Balkans Joint Fund (EWBJF).  It has also contributed to the Eastern Europe Energy Efficiency and Environment Partnership (E5P) and the Ukraine Stabilisation and Sustainable Growth Multi-Donor Account.  In 2019, Poland provided a contribution for technical assistance support to EBRD projects across various sectors in the country.      

The EBRD's latest Poland strategy was adopted on 11 April 2018.

 

The Polish economy proved resilient in 2022, growing by 5.1 per cent, as investment expenditures expanded by 4.5 per cent, despite elevated financing costs and tightening bank lending. The growth momentum significantly slowed down towards the end of 2022 and in the first months of 2023. Weaker private consumption, reflecting the rapidly rising cost of living, slowdown in public expenditure growth and negative net exports, have been weighing on growth. Annual HICP inflation stood at 15.2 per cent in March 2023 while core inflation, which excludes energy, food and tobacco, reached 11.6 per cent. Although inflation is expected to return to single-digit levels before the end of 2023, it is likely to stay above the 2.5 per cent target of the National Bank of Poland well into 2025.

Unemployment remains close to multi-year lows, but declining real wages took a toll on retail sales. GDP growth in Poland is forecast to drop to 0.6 per cent in 2023, recovering to 3.0 per cent in 2024. The second half of 2023 could see improved economic figures, as tax cuts passed in 2022, together with a potential pre-election spending spree, could boost domestic demand.

The Polish banking system appears to be resilient in terms of capital coverage, supervision and liquidity. In the longer term, unresolved legacy issues related to Swiss franc-denominated mortgages, and the practice of ad-hoc regulatory changes such as mortgage moratoria may weigh on banks’ lending appetite. This is a source of concern given the large private-sector investment needs, including to fund energy generation projects.