Poland's GDP grew by 3.7% year on year in the first quarter of 2025, easing by 0.2pp against the preceding quarter, seasonally adjusted preliminary data released by the statistical office GUS showed on June 2. 

The reading comes in at 0.2pp below the adjusted annual expansion in Q4. On a quarterly basis, the economy expanded by 0.7% in seasonally adjusted terms, slowing from a 1.4% quarter-on-quarter rise in Q4 2024. In unadjusted terms, GDP also increased by 3.2% y/y in the first quarter, compared to a n expansion of 3.4% y/y in the final three months of 2024.

“The data align with our scenario that assumes GDP will grow by 3.3% in 2025, following a 2.9% increase in 2024,” PKO BP said in a comment.

“The second half of the year will likely bring solid growth in private outlays, as indicated by strong increases in the estimated value of new investment projects. A rebound in consumption later in the year will be supported by better-than-expected income conditions – higher wages, lower inflation – as well as recent and anticipated interest rate cuts,” PKO BP also said.

The breakdown of the data showed that investment rebounded strongly, while household consumption softened. Gross fixed capital formation rose 6.3% y/y, recovering from a 6.9% decline in Q4. Overall gross capital accumulation surged by 19.9% y/y (+7.3% y/y in Q4), driven in part by inventory growth.

Household consumption, which had led the Q4 expansion, grew by 2.5% y/y in Q1, slowing from 3.5% y/y in the prior quarter. In total, domestic demand increased 4.6% y/y in Q1, compared with a 5.3% y/y gain in Q4.

Net trade again weighed on growth. Rising domestic demand fuelled imports, while weak external conditions constrained exports. As a result, net exports subtracted 1.1 percentage points from GDP growth in Q1, following a 1.6pp drag in Q4.

Inventories made a significant contribution to growth in Q1, adding 1.5pp to GDP. In total, domestic demand contributed 4.3pp to the annual growth figure, including 2pp from consumption and 8pp from investment.

Gross value added in the economy increased by 2.2% y/y in Q1. The strongest growth was recorded in transport and storage (+4.1%) and in public services such as health and education (+3.8%). Industry posted a 1% y/y increase, while construction grew by 0.8%. Value added in the financial sector fell slightly by 0.1%.

The steady pace of growth in Q1 reinforces the view that Poland is entering a more stable phase of recovery. Analysts expect GDP to expand by 3.2-3.5% in 2025, driven by investment, EU funds and improving demand from the eurozone.

The latest data support expectations that the National Bank of Poland could begin cutting interest rates in the second half of 2025 – provided inflation remains under control and growth proves less inflationary than feared.