Economic news

• INFLATION: According to the flash estimate, inflation fell from 4.9% yoy in March to 4.2% yoy in April, slightly below consensus of 4.3% yoy. While the drop was precipitated by high base from last year (the hike in VAT on most food items), the details were still benign. We estimate that core inflation came out at 3.5% yoy. A more comprehensive comment on the release can be found under the following link.
• INTEREST RATES: According to Joanna Tyrowicz (the most hawkish member of the MPC), policymakers have no reasons to be concerned, but she does not see any rationale for monetary easing. If recent trends in macro data persist, current interest rate levels will be appropriate, as opposed to the higher level Tyrowicz has been arguing for until now.
• FISCAL POLICY: The government approved new multi-year macroeconomic forecasts (for 2025-29), prepared by the Ministry of Finance. The MoF now assumes that general government deficit would decline to 6.3% of GDP this year, while public debt would rise to 57.8%. This constitutes a major, but totally expected revision due to higher starting point (2024 deficit was considerably wider than anticipated) and weaker tax revenues. The MoF expects inflation at 4.5% this year and 3.8% in 2026. GDP growth is forecast at 3.7% and 3.5%, respectively.  
• DEBT: Following the recent bond sales auction (PLN 8.3 bn sold), the Ministry of Finance financed 62% of this year’s gross borrowing needs. The figure will rise after May as the MoF also announced that it was planning to conduct three bond sales in May (with total supply in the range of PLN 16-32 bn) and one T-bill auction (PLN 3-6 bn).

How did the influx of war refugees affect the Polish economy?

This week we decided to look at the results of a new study by NBP economists on the impact of wartime immigration of Ukrainians on the Polish economy. This is not a new topic – mass immigration to Poland has been going on for over 10 years and the “pre-war” estimates of its impact on the Polish economy are known. According to the same NBP economists, the wave of immigration from 2013-2018 was responsible for about 15% of economic growth in that period, or about 3.5 percentage points of GDP. What has changed since then?

Number of immigrants employed in Poland by destination (thousands)

Note: green – pre-war immigrants from Ukraine, purple – refugees from Ukraine, blue – immigrants from other destinations

Source: Strzelecki, Growiec and Wyszyński, 2025

Firstly, this time the NBP economists show specific numbers this time describing how the immigrant pool has changed during that time. The outbreak of war caused a significant influx of people to Poland – in 2023 it was almost 500k new employees. At the same time, we witnessed the outflow of some people (about 200k) from the previous wave of immigration, mainly back to Ukraine. In 2022-2023 the number of Ukrainians working in Poland increased by about 250k. To this should be added approx. 100k additional employees from other directions.

Secondly, the NBP estimates that in 2023 about 1.8 mn immigrants worked in Poland. This means that approximately every tenth person working in Poland is an immigrant. The contribution of immigration to employment has been systematically growing in the last decade and in 2022-23 immigration to Poland was responsible for the majority (2/3) of the increase in employment.

Thirdly, if it were not for the influx of refugees, economic growth in Poland in 2022-23 would have been lower. The NBP estimates that they account for about 1.5 percentage points of the slightly over 5% increase in total GDP. The contribution of immigration (taking into account the outflow of some workers from the previous wave) in this period is almost 1 percentage point of GDP.

Fourthly, this means that the role of immigration in shaping Poland's economic growth has been growing in the last decade. We also have signals that in the period no longer covered by the study (2024 and early 2025), the inflow of migrants continued to slow down, which translates into slightly slower economic growth. This is not a decisive factor, but the difference between GDP growth of 3.5% and 4% can be successfully explained by lower immigration.

Decomposition of economic growth in Poland in 1997-2023

Note: pink – working Poles, yellow – total immigrants, blue – productivity of production factors, grey – capital and its use

Source: Strzelecki, Growiec and Wyszyński, 2025

Fifthly, the discussed results of the study do not mean that the full-scale war beyond our eastern border was beneficial for the Polish economy on balance. Quite the opposite – the main channel of impact was higher energy prices, the impact of which on the Polish economy was clearly negative. The NBP study published last year indicates that the increase in energy prices from 2022-23 translated into a 2.8% decrease in GDP. The net inflow of workers from Ukraine, as we indicated above, is 1 percentage point of GDP. These two numbers, however, do not exhaust the entire impact of the war on the Polish economy. We should take into account the impact of changes in trade flows during this period: a decline/stagnation in exports to Europe which was struggling with the effects of higher energy prices, an increase in exports to Ukraine, and the closure of the Belarusian and Russian markets to Polish producers. The total impact of the war would therefore be significantly higher than 1.8% of GDP resulting from the comparison of the effects of higher energy prices and higher labour supply alone.

The scale of the war shock is therefore so large that it should come as no surprise that the Polish economy has been growing at a rate below its potential in recent years. It is worth recalling that at the end of 2024 it was about 5% lower than the long-term trend indicated. The war is part of this story (although there are probably also cyclical factors, such as tight monetary policy).

Poland's real GDP and long-term trend (2015 = 100, seasonal data)

Source: Statistics Poland, Macrobond, Pekao Research

Financial market update

The May spring break brought few major changes to the valuations of Polish assets: the zloty remained stable against major currencies, Poland’s main stock market indices followed the earlier increases in foreign benchmarks and POLGB yields rose slightly, following core market analogues. This is rear-view mirror now. A new week began and it will be quite an important one for the markets. The key event will, of course, be the MPC meeting, which expected to end with a rate cut. Market pricing and an overwhelming majority of economists agree that the MPC will cut rates by 50 bps. However, there is no consensus regarding the MPC's next steps. The Council is only comfortable with signaling a modest amount of easing this year (100 bps or slightly more) and most economists agree. Markets, on the other hand, are currently pricing in a full-blown frontloaded easing cycle (200 bps by the end of the year). The markets may be right here, of course, and the Council may be underestimating that once an easing cycle is set in motion, it is difficult to stop. This is the 2021-2022 playbook – markets consistently expected the Council to hike by more than it believed and communicated, and won. However, the playbook failed in 2023 as the Council showed that it was capable of stopping early. Thus, caution is advisable in our view, and markets are now making a big bet against the NBP. Comments by the NBP president after the meeting may be an indication of how risky that bet is.