EC: Poland’s GDP growth will accelerate to 3.5% in 2026. But the country is also expected to have the highest deficit in the EU

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

Poland leads in GDP growth...

The European Commission has revised its GDP growth forecast for Poland for 2025 slightly downward: from 3.3% to 3.2%. However, it has significantly raised its projection for next year: from 3% to 3.5%. Growth is expected to accelerate on the back of investment, particularly increased utilization of funds from the National Recovery Plan (KPO). Private consumption is expected to play a smaller role than in the current year, reflecting the anticipated slower pace of real income growth. This effect may be partially offset by a decline in the savings rate. Nevertheless, the forecast projects that investment will be strong enough to outweigh the slower growth in household consumption. This will result in a temporary acceleration of growth in 2026, followed by a slowdown to 2.8% in 2027.

The summary above shows that in 2026 Poland will once again rank among the leading EU countries in terms of GDP growth (trailing only Malta, with a population of 600,000). This holds true throughout the entire forecast horizon (2025-2027). It's also worth noting the projected economic rebound in Germany (growth of 1.2% in both 2026 and 2027) after several years of stagnation.

Inflation (measured by the EC using the HICP index) is expected to moderate in Poland to 2.9% in 2026 from 3.4% in 2025. Under a scenario assuming the implementation of ETS2, which would impose CO2 emissions charges on the building and transport sectors, price growth would accelerate to 3.7% in 2027. This is due to significantly higher heating and fuel costs, as we outlined in a recent analysis.

Setting aside the future of ETS2 for now, it's worth focusing on 2026. The chart above compares two fundamental macroeconomic indicators: GDP growth and inflation. Few countries are expected to experience higher inflation next year, and all of them are in our region (Hungary, Romania, and Slovakia). However, among the large economies, only Spain besides Poland is expected to record solid GDP growth (exceeding 2%). The rest will hover around 1%.

... and in deficit

The European Commission forecasts Poland’s fiscal deficit at 6.8% of GDP this year, 6.3% next year, and 6.1% in 2027. This trajectory is slightly lower than the path presented by the Ministry of Finance for 2025-2026 in connection with the budget act. The projected reduction in Romania’s deficit from 8.4% of GDP in 2025 to 6.2% in 2026 means that Poland will become the EU leader in deficit size.

However, Romania is paying a steep price in the form of low GDP growth in 2025-2026. In Poland, the high deficit has sustained GDP growth in 2024-2025, reflected for example in the significant contribution of public consumption. Meanwhile, the Polish economy is expected to operate at full capacity in 2026-2027 (with actual GDP close to potential). From this perspective, there is room for fiscal consolidation (deficit reduction). However, according to the EC forecast, the reduction in 2026-2027 will amount to only 0.2 percentage points in structural terms (cyclically adjusted). And this assumes implementation of the tax increases outlined in the budget bill (with no presidential veto). On the other hand, the EC does not factor in further tax tightening plans in its forecast due to their tentative nature. As a result, Poland’s debt-to-GDP ratio is expected to reach nearly 70% in 2027.

Strong GDP growth driven by investment. Poland is expected to remain one of the fastest-growing economies in the EU during 2025-2027, trailing only Malta in the 2026 rankings for GDP growth. The European Commission forecasts an acceleration in 2026 thanks to robust investment—mainly from increased use of National Recovery Plan (KPO) funds—despite slower growth in private consumption.
High deficit and rising debt. Poland will lead the EU in the size of its fiscal deficit over the forecast period, with a deficit projected to stay above 6% of GDP through 2027. While Romania’s deficit will shrink, Poland’s deficit remains high, supporting GDP growth for now but resulting in a debt-to-GDP ratio near 70% by 2027.
Moderate inflation outlook with energy risk. Inflation in Poland is expected to moderate to 2.9% in 2026 before rising to 3.7% in 2027 if the ETS2 (CO2 emissions charges) is implemented, driven by higher energy costs. Few EU countries are forecasted to experience higher inflation in 2026, and all of them will be in the Central and Eastern European region.