Poland wins the economic race in Central Europe

This article is a part of Poland Unpacked. Weekly intelligence for decision-makers

Over the past three decades, the economic balance of power in Central and Eastern Europe has shifted markedly. Poland remains the region’s number-one economy, while the relative importance of Czechia and Hungary has declined.

We looked at changes in the economic structure of the European Union. As a reminder, Poland is the EU’s sixth-largest economy. It is also worth looking at how the balance has shifted within our part of Europe.

Poland as strong as ever

Over the past three decades, the balance of economic power in Central and Eastern Europe has changed markedly, although Poland’s position looks almost unchanged at first glance. In 1996, Poland accounted for 38% of the combined GDP, measured in euros, of the countries analyzed in the region, exactly the same share as in 2025. In the intervening years, however, its weight fluctuated considerably. At the beginning of the 21st century, Poland’s share exceeded 40%, before falling to around 34–37%. It remained at roughly that level for the past dozen or so years. Since 2021, it has started to rise again.

The biggest winner of the past three decades, however, has been Romania. Its share of the region’s economy increased from 8% in 1996 to 15.5% in 2025, almost doubling. Romania’s position strengthened particularly rapidly during the first decade of the 21st century. In the mid-2000s, it overtook Hungary in terms of its share of the regional economy, and in recent years it has also surpassed Czechia. As a result, Romania has become the second-largest economy in the part of Europe analyzed, whereas three decades ago it ranked only fourth.

The opposite trend can be seen in Czechia and Hungary. Czechia’s share fell from 16% to 14%, although it remained relatively stable for most of the period under review. The more pronounced weakening came only in recent years. Hungary lost more ground: its share declined from 12% in 1996 to 9.3% in 2025. At the beginning of the period under review, the Hungarian economy was half again as large as Romania’s. Today, the proportions have almost completely reversed.

What about the rest of the region?

The changes extend beyond the four largest economies. Bulgaria also gained ground, with its share rising from 2% to 4.7%, while Lithuania’s increased from 2% to 3.1%. Slovakia, by contrast, saw its share decline from 6% to 5.4%. Croatia’s fell from 6% to 3.9%, while Slovenia’s dropped from 6% to 3.1%. Estonia and Latvia also lost some ground, with each country’s share falling from around 2% to 1.6%.

Two measures, two pictures

It is worth noting that the comparison above is based on nominal GDP measured in euros. Changes in individual countries’ shares are therefore driven not only by real economic growth, but also by differences in price dynamics and the movements of national currencies against the euro. The chart thus captures changes in the region’s nominal economic strength, rather than differences in real growth alone.

The way economic size is measured matters greatly when assessing how the balance of power in Central and Eastern Europe has changed. If we instead look at GDP at purchasing power parity (PPP), Poland’s position has strengthened by far the most. Its share of the combined GDP of the 11 countries analyzed increased from 31.7% in 1996 to 38.9% in 2025. Over the same period, the shares of Romania, Czechia and Hungary declined. On this measure, therefore, the past three decades have primarily brought a further strengthening of Poland’s dominant position in the region.

The difference stems from the fact that nominal GDP measured in euros depends not only on real economic growth, but also on changes in price levels and – among countries outside the euro zone – exchange rates. PPP, by contrast, adjusts for differences in price levels between countries. Romania was therefore already a significantly larger economy in the mid-1990s in terms of the volume of goods and services it produced than its very low nominal GDP in euros suggested at the time. Conversely, Poland’s rising share of regional GDP at PPP shows that its growing importance in the region cannot be explained solely by price convergence or exchange-rate movements. Its share of the region’s economy has also increased when measured after accounting for differences in purchasing power.

Population changes matter

A country’s share of the region’s GDP is determined not only by changes in productivity, but also by changes in its population. This is particularly important in Central and Eastern Europe, where demographic trends have varied widely since 1996.

Poland is an interesting case. Its population has fallen by 5.5%, according to IMF data, while its share of the region’s GDP at purchasing power parity rose from 31.7% to 38.9%. This means the Polish economy grew significantly faster than its population – and faster than most economies in the region. The opposite was true in Czechia: its population increased by 5.6%, while its share of regional GDP fell from 15.6% to 12.5%. On a per-capita basis, therefore, Poland developed considerably faster than Czechia over this period.

The populations of Romania, Bulgaria, Lithuania and Latvia declined by between 17% and almost 25%. Even rapid growth in GDP per capita does not necessarily translate into a larger share of the region’s overall economy. Romania, for example, saw its share of regional GDP fall from 18.6% to 17.5%. Losing more than one-sixth of its population means that its relative position in terms of GDP per capita must have improved significantly.

Poland remained by far the largest economy in the region, and its position strengthened further when measured at purchasing power parity: its share rose from 31.7% in 1996 to 38.9% in 2025. At the same time, Czechia and Hungary lost ground. Nominal GDP measured in euros, by contrast, shows much more pronounced shifts, underscoring how the region’s economic map depends on the measure used.
Nominal GDP converted into euros depends not only on economic growth, but also on price levels and exchange rates. PPP adjusts for differences in prices between countries, providing a better measure of the relative size of the economies’ output. Thus, an increase in a country’s nominal economic weight may partly reflect price convergence or a stronger currency, rather than faster growth in real output alone.
Population decline constrained the rise of many economies in the region, even when their GDP per capita was growing rapidly. Despite a 5.5% decline in its population, Poland increased its share of the region’s GDP at PPP, pointing to particularly strong economic growth on a per-capita basis. In countries that lost between several percent and more than 20% of their population, improvements in per-capita performance were not always enough to increase the country’s share of the region’s overall economy.