Economic news 

• GDP: The Central Statistical Office has published the final Poland’s GDP reading for 3Q25. The revised data show that GDP in this period grew by 3.8% yoy, slightly faster than estimated in the flash estimate (3.7%) two weeks ago. The details include a few surprises, including relatively low private consumption growth and very high investment growth. We comment on these data in more detail later in the report.
• MONETARY POLICY: At its December decision meeting, the Monetary Policy Council decided to cut interest rates by 25 bps (reference rate down to 4.00%). The statement following the meeting, while very similar to the November one, contained more dovish tones. Commenting on the slowdown in wage growth, the Council stopped describing it as "gradual"; in turn, the reference to increased service price increases was removed from the inflation outlook. At the press conference after the meeting, traditionally reluctant to provide forward guidance the NBP President Adam Glapiński quite clearly announced the MPC's further steps. At the beginning of 2026, the Council is to enter a wait-and-see mode, suspending further interest rate cuts. Following his guidance, we should expect a pause in rate cuts in the first months of 2026, followed by a return to cuts. However, we maintain our forecast that the reference rate will reach 3.50% sooner rather than later – certainly in the first half of the year.
• LABOUR MARKET: According to the preliminary estimate from the Ministry of Family, Labour and Social Policy, the registered unemployment rate in Poland rose to 5.7% in November from 5.6% the previous month. This reading was in line with market expectations. According to our estimates, the impact of regulatory changes (implemented in June 2025) on the recent increases in the unemployment rate is clearly fading and negative seasonal effects will once again play a dominant role (culminating in January and February). We assume that the unemployment rate will end 2025 at 5.8%.

Strong investment, weaker-than-expected consumption - paradoxes of Poland GDP in the third quarter

Last week, Poland’s GDP detailed data for the third quarter of 2025 was published. This data resulted in a slight revision of GDP growth compared to the flash figure released two weeks ago. According to the revised reading, the Polish economy in 3Q25 grew by 3.8% yoy and 0.9% qoq, which is slightly faster than the consensus, but slightly slower than our forecast. As usual, the details are more interesting. The third quarter followed the pattern of large surprises in GDP data observed throughout the year.

Firstly, private consumption turned out to be weaker than forecasts. In Q3, it grew by only 3.5% yoy (1 pp. below forecasts) and even declined slightly quarter-on-quarter (-0.1%). This result defies explanation – note, above all, that monthly retail sales growth did not show such fluctuations during this period. Since goods consumption remained strong, a natural explanation seems to be the weakness in services consumption, related, for example, to a less-than-successful summer season. However, this, in turn, is not confirmed by growth of value added by sector. Even more puzzling is the fact that the weakness in consumption in the summer months has been repeated for the second consecutive year, albeit with much less intensity. As a reminder, private consumption stagnated in the third quarter of 2024. Regardless, it's difficult to treat the third-quarter result as anything other than a one-off accident, as private consumption currently has strong foundations.

Private consumption and retail sales growth (constant prices, % yoy)

Source: Statistics Poland, Macrobond, Pekao Research

Secondly, what households didn't consume was "eaten" by the government. Public consumption grew by 7.4% yoy in the third quarter, many times faster than in the first half of the year (1.5-2% yoy). This category is difficult to forecast and practically unobserved in monthly data, but the acceleration in public consumption is nonetheless surprising, given the low wage growth in the public sector (the main determinant of this category).

Thirdly, investment was supposed to recover in the third quarter, and it did so remarkably. We have a new cyclical peak in investment growth: 7.1% yoy. Investment volatility (this year: +6.4%, -0.7%, and +7.1% yoy, respectively) is the largest constant in the national accounts for 2025. The growth rate of gross fixed capital formation exceeds both the growth rate of business investment and the growth rate of construction and assembly output. This is not surprising. However, the short-term volatility, which is only visible in national accounts data, is unusual. This suggests that large, one-off expenditures in a sector not observed in other data may be responsible for the fluctuations in investment growth. Armaments seems an obvious candidate. It cannot be ruled out that the Central Statistical Office will rectify this trend in future national accounts revisions.

Investment growth in Poland according to various measures (constant prices, % yoy)

Note: Investment expenditure of non-financial enterprises were estimated based on cumulative data.

Source: Statistics Poland, Macrobond, Pekao Research

Fourthly, recent quarters have seen a significant recovery in exports. In the third quarter, exports of goods and services grew by 6.1% yoy, the fastest since 2022. This is the fourth consecutive quarter with export growth and the third consecutive quarter with exports growing by at least 1% qoq. Has the death of the Polish exporter been announced too soon? Not necessarily. Polish exporters are operating in difficult conditions, with average GDP growth in Polish trading partners closer to the 2012-13 period than 2017-18, but Poland's exports has historically grown faster than the market (GDP of major trading partners, global imports, etc.). The current growth is essentially normal, given this historical pattern. The weakness of Polish exports in previous quarters was abnormal.

Polish exports versus global imports and GDP growth of Poland's main trading partners (% yoy)

Source: Statistics Poland, Macrobond, CBP, Pekao Research

In summary, the data does not affect our Poland’s GDP growth forecast for 2025 – we still expect growth to reach 3.6%, but with slight changes in its composition. We currently predict private consumption to have increased by 3.6%, and investment by 5.0%.

In 2026, the Polish economy will accelerate further, with investment driving growth. We assume that Poland’s GDP will increase by 4.0% in 2026.

Financial Market Update

Friday was a relatively uneventful day in the domestic market. The zloty strengthened slightly against the euro and dollar, regaining some of Thursday's losses. There were small changes consistent with the sideways trend in the zloty, which has been ongoing for about a month. The EUR/PLN has been fluctuating between 4.22 and 4.24 since mid-November. The source of the zloty strength is primarily the international environment: the lack of escalation in trade conflicts and the ongoing peace talks in Ukraine. Both factors seem to be slowly losing their significance. Tensions between the US and the EU appear to be escalating, and the aforementioned talks are dragging on.

Therefore, we wouldn't be surprised to see a slight depreciation of the zloty this week, especially given the empty macroeconomic data calendar for Poland. However, we don't expect a break in the sideways trend in the EUR/PLN. As for the POLGBs market, neither Wednesday's interest rate cut nor Thursday's press conference by the NBP President made any impression. Yields remained virtually unchanged. We predict they will gradually decline as further rate cuts begin to be priced in. Recent macroeconomic data pointed to this scenario, and we believe future data will do the same, although this week's calendar is currently empty. Therefore, the downward movement in short-term bond yields will be limited for now.