Poland: Towards a strong and healthy economy

By Zuzana Smidova

Link to the blog in Polish

Living standards in Poland have increased significantly over the past two decades, as the economy doubled in size, when measured by GDP per capita. Poland has narrowed the gap with its regional peers, Czechia and the Slovak Republic (Figure 1), and average life expectancy has risen to 78.6 years.

Progress has slowed more recently due to two external shocks: the COVID-19 pandemic and repercussions from Russia’s war of aggression against Ukraine. Nevertheless, the economy recorded a robust growth of almost 3% last year and the momentum is expected to continue this year and next. This strong economic performance is reflected in the labour market, where the unemployment rate has reached historic lows and the number of people in work has exceeded pre-pandemic levels.

Figure 1. Strong growth led to significant catching up in economic standards

The Economic Survey of Poland, published today, takes stock of this progress and examines the main short- and long-term challenges facing the economy.  The most immediate challenge is to bring down inflation. Although the inflation rate has come down substantially from its peak of 18% in February 2023, it is still above the central bank’s target. Core inflation also remains elevated, at over 4%. In this context, monetary policy should remain restrictive, but interest rates should gradually ease as wage growth slows and inflationary pressures durably subside.

Poland’s fiscal deficit has deteriorated in recent years due to rapid increases in social, health and defence spending. To finance current government priorities and prepare for future spending pressures, Poland needs a sustained fiscal adjustment as planned by the authorities. On the expenditure side, certain universal family benefits could be withdrawn for higher earners. On the revenue side, tax expenditures, environmental and property taxation could raise more revenue. Changing the taxation of buildings, currently based on the surface area, to a system based on the value of the property, which exists in most of OECD countries, would help.  

A supportive business environment, combined with a well-educated population, has attracted foreign investment and innovative companies. However, Polish companies face challenges in moving up the value chain, population ageing and a shortage of skills. The skills shortages should be addressed through increased training and upskilling, especially among small and medium-sized companies, as well as through targeted awareness campaigns and a comprehensive migration strategy.

Given Poland’s continued reliance on coal, the transition to an economy that produces net zero emissions by 2050 is challenging (Figure 2). It requires stepping up implementation of the policies outlined in the draft National Energy and Climate Plan 2030, strengthening price incentives, and a range of supports for the most vulnerable. A more ambitious phase out of coal and shorter permitting times for renewables would help achieve the necessary long-term private sector investment. Emissions from the transport sector have doubled in the last thirty years. To reverse this trend, a comprehensive motor vehicle taxation covering all cars, would strengthen price signals, and should be accompanied by continued investment in public transport.

Figure 2: Electricity production from renewable sources has increased but coal remains important

While life-expectancy has increased, it remains behind many OECD countries and there is a scope to improve health outcomes (Figure 3). Funding of the health system has increased, but rationalising excess bed capacity in hospitals and making more use of incentives in primary care would allow to raise efficiency and improve care. Improvements to treatment and a greater focus on prevention, particularly when it comes to risky behaviour such as drinking and smoking, can significantly improve health outcomes. With pressures from the ageing population, the authorities need to expand long-term care in a sustainable way.

Figure 3: Life expectancy improved significantly but remains below the OECD average

Reference:
OECD (2025), OECD Economic Surveys: Poland 2025, OECD Publishing, Paris, https://doi.org/10.1787/a35a56b6-en