Polish GDP grew 3.8% year on year in the first quarter of 2025, slightly below the revised 3.9% increase recorded in the previous three months, seasonally adjusted data from the Central Statistical Office (GUS) showed in a flash estimate on May 15.

The economy “remained on a path of stable, moderately fast growth, one of the highest in the EU,” Santander Bank Polska said in a comment. Analysts say the expansion was likely supported by a modest rise in household spending, while investment probably declined year on year, though to a lesser extent than in prior quarters.

“We also expect a clearly positive contribution from inventories and a negative contribution from net exports. On the supply side, we anticipate a strong contribution from services, with weaker performance in manufacturing and construction,” Santander Bank Polska also said.

The full breakdown of GDP components will be released in early June.

On a quarterly basis, GDP rose 0.7% in seasonally adjusted terms, following a 1.4% increase in the fourth quarter of 2024. In unadjusted terms, annual growth eased to 3.2% from 3.4% in the preceding quarter.

Analysts expect growth to maintain a similar pace throughout the year.

“Inflows of EU funds, the effects of interest rate cuts, broad-based modernisation of the defence industry across the EU and strong public investment should support an acceleration in GDP growth to 3.3% in 2025, up from 2.9% in 2024,” PKO BP said.

Investment activity is expected to pick up, with PLN60bn (€13.88bn) from the EU recovery fund anticipated to reach beneficiaries in 2025, compared with PLN20bn a year earlier. Structural funds are also set to accelerate.

While household spending remains uncertain, sentiment has improved. “We expect consumers to make greater use of their spending potential, particularly in light of interest rate cuts and declining inflation,” PKO BP said. The bank noted, however, that global uncertainty could still restrain household expenditure.

The latest GDP data do not significantly alter the current monetary policy outlook, which shifted in recent weeks.

The National Bank of Poland (NBP) cut its reference rate by 50bp to 5.25% in May, following a decline in inflation to 4.3% year on year in April, down from 4.9% in the first quarter.

While further cuts have not been ruled out, the NBP indicated any additional moves would likely be limited to 25bp increments and would depend on the updated macroeconomic projections due in July.