Poland’s economy holds strong against a challenging backdrop

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

At the beginning of each month, we assess the health of Poland’s economy, focusing on key macroeconomic indicators and financial market developments. This edition draws on real economy data for August 2026 and financial market developments in September 2026.

August’s figures suggest that the economy remains in very good shape. Retail sales rose by 3.8% year-on-year, virtually matching July’s growth rate. As in previous months, durable goods recorded the strongest gains. Sales of cars, motorcycles and vehicle parts increased by 11.7% year-on-year, while sales of furniture, consumer electronics and household appliances rose by 10.6%.

Manufacturing output grew by 3.4% year-on-year in August, down from 4.2% in July but still a solid performance. The strongest gains were recorded in industries producing capital goods and intermediate products used by other businesses.

Output of electrical equipment surged by 18.7% year-on-year in August. Poland is currently experiencing a recovery in investment, which is boosting demand across parts of the manufacturing sector. Several factors are driving this trend, most notably large-scale spending of EU funds, including resources from the National Recovery and Resilience Plan (KPO) and security-related funding, alongside investment in the energy transition and defense.

But inflation is rising

So far, there is little evidence that high fuel prices – which rose by more than 20% year-on-year in August – have significantly affected consumer spending. It is still too early, however, to tell whether the impact will become more apparent in the coming months, particularly as real wage growth is slowing sharply. This reflects both weaker nominal wage growth, which fell to 5.9% in the corporate sector in August, and rising inflation. With consumer prices up 3.4% that month, real wages increased by just 2.1%, their slowest pace in several years.

The picture is likely to worsen in September, as inflation climbed to 4%. This was the first reading above the National Bank of Poland’s inflation target range, which has an upper limit of 3.5%, since May 2025. The increase was driven primarily by fuel prices, which surged by 36.1% year-on-year in September. The spike reflects persistently high global oil prices amid conflicts in the Middle East.

The president’s U-turn

In a somewhat unexpected move, President Karol Nawrocki signed legislation imposing a windfall profits tax on fuel companies. This allowed the government to roll out the full version of its Lower Fuel Prices (CPN) scheme, including cuts to VAT and excise duties. The measures came into effect on October 3 and will remain in place until the end of the year. For the first time in a long while, a government support program has been accompanied by an identified source of funding. That matters given Poland’s strained public finances. It also offers a small glimmer of hope for the future: credit rating agencies have identified tensions between the government and the president as one of the main risks to fiscal consolidation.

Lower fuel prices should help contain inflationary pressures in the coming months. This, in turn, should sustain real wage growth and support further consumer spending. The outlook for next year, however, remains uncertain. Whether oil prices stay elevated will depend heavily on geopolitical developments. Meanwhile, the finance minister has little fiscal firepower left, with Poland facing substantial budgetary challenges in the years ahead.

Financial markets: a stronger dollar and rising bond yields

September was also an eventful month for financial markets. The Polish zloty weakened significantly against the US dollar, losing 3.3% over the month. By the end of September, the exchange rate stood at PLN 3.85 per USD.

The zloty’s recent depreciation can largely be attributed to rising global risk aversion following the outbreak of war with Iran, alongside higher energy commodity prices. Poland’s currency has come under pressure on two fronts: as an emerging-market currency and as the currency of a country that relies on energy imports.

In a broader perspective, however, the zloty’s depreciation mainly represents a partial reversal of its earlier appreciation. This is particularly evident against the dollar. In early 2025, the exchange rate exceeded PLN 4.10 per USD, before falling below PLN 3.60 in early 2026.

Meanwhile, yields on Polish 10-year government bonds rose by another 0.3 percentage points to 6.3–6.4%. The increase reflects a broader global trend of rising sovereign bond yields, driven by concerns over persistently elevated inflation, the outlook for monetary policy and mounting public debt.

The increases were even sharper elsewhere. US 10-year Treasury yields climbed by 0.5 percentage points to 5.3% in September, while French 10-year government bond yields jumped by as much as 0.7 percentage points to 4.9%. In the eurozone’s second-largest economy, the approaching election campaign has become a source of concern against a backdrop of weak public finances. Olivier Blanchard, a prominent macroeconomist, warns that the longer France delays the necessary fiscal adjustment of around EUR 30bn annually, the greater investors’ concerns become, pushing borrowing costs higher. By his estimates, a one-percentage-point increase in financing costs would eventually add roughly EUR 30bn to the burden on France’s public finances.

Against this backdrop, Poland’s stock market attracted somewhat less attention, although it continued to perform relatively well. The broad WIG index gained 3.2% in September, with larger companies outperforming smaller ones. The blue-chip WIG20 rose by 4%, while the mid-cap mWIG40 was virtually flat, slipping 0.4%. The small-cap sWIG80, meanwhile, fell by 2.8%.

August’s data showed that Poland’s economy remained in very good shape. Retail sales grew by 3.8% year-on-year, virtually matching July’s pace, with particularly strong demand for durable goods, including cars, furniture, consumer electronics and household appliances. Industry also performed well. Manufacturing output rose by 3.4% year-on-year, led by producers of capital and intermediate goods. This suggests that investment is becoming an increasingly important driver of growth alongside consumption, supported by EU funding, including the National Recovery and Resilience Plan (KPO), as well as spending on energy and defense.
Consumer spending should continue to grow in the coming months, although the outlook has weakened somewhat. The main challenges are accelerating inflation, driven by high fuel prices, and a marked slowdown in real wage growth. Inflation had already reached 3.4% in August. However, the full rollout of the government’s Lower Fuel Prices (CPN) scheme should help contain inflationary pressures and sustain growth in households’ real incomes. The outlook for 2027 is considerably more uncertain, with much depending on geopolitical developments and oil prices, while limited fiscal space leaves the government with little room to provide further economic support.
September brought a weaker zloty and higher government bond yields. The Polish currency lost 3.3% against the US dollar amid rising global risk aversion and elevated energy prices. Yields on Polish 10-year government bonds climbed by around 0.3 percentage points to 6.3–6.4%, reflecting a broader global increase in borrowing costs. Meanwhile, Warsaw’s stock market performed relatively well: the broad WIG index gained 3.2%, while the blue-chip WIG20 rose by 4%. Smaller companies lagged behind, with the mWIG40 falling 0.4% and the sWIG80 declining 2.8%.