Poland’s Economic Outlook Faces Crosscurrents as U.S. Trade Policies Cloud Growth Prospects

Poland has revised its 2025 economic growth forecast to 3.5%, down from earlier estimates, as domestic strengths clash with external headwinds fueled by U.S. trade policies. While resilient consumer spending and EU-funded infrastructure projects anchor growth, rising trade deficits, inflation, and the lingering effects of global protectionism are testing the economy’s resilience.

Domestic Drivers Amid Global Uncertainty

Poland’s economy has long been a standout in Central Europe, buoyed by low unemployment (4.8% in Q2 2025) and robust EU recovery funds. Government spending on infrastructure and social programs has supported private consumption, which accounts for over 50% of GDP. However, quarterly growth slowed to 0.7% in Q2—its weakest rate in two years—due to widening trade imbalances. Exports, hamstrung by global supply chain disruptions and weaker demand in key markets, grew only 1.2% year-on-year, while imports surged 6.8% as domestic demand outpaced production.

The trade deficit expanded to €3.1 billion in Q2 2025, nearly double its level in 2023, straining the zloty and amplifying inflationary pressures. Core inflation, excluding volatile items like energy and food, remains elevated at 3.5%, while headline inflation sits at 5.0%, driven by wage growth of 8.4% year-on-year and rising import costs.

U.S. Trade Policies: The Elephant in the Room

The IMF’s April 2025 World Economic Outlook report underscores how U.S. tariffs and trade restrictions are reshaping global economic dynamics. Since late January 2025, U.S. measures have contributed to a sharp slowdown in global trade growth—from 3.8% in 2024 to just 1.7% in 2025. For Poland, this has compounded existing vulnerabilities.

The U.S. tariffs, particularly on steel and semiconductors, have disrupted supply chains and forced companies to seek costlier alternatives. Meanwhile, Poland’s reliance on German and Chinese imports—critical for its manufacturing sector—has left it exposed to rising global protectionism. The IMF estimates that Poland’s trade deficit could climb further if U.S. policies persist, squeezing corporate margins and limiting export competitiveness.

Fiscal and Structural Challenges

Poland’s public debt is projected to rise to 57.7% of GDP in 2025, up from 49.6% in 2023, as the government prioritizes defense spending and social programs over fiscal consolidation. Meanwhile, labor shortages in IT, healthcare, and manufacturing—aggravated by an aging population—are pushing wages higher and straining corporate balance sheets.

The Civic Coalition’s migration reforms, including a point-based system for non-EU migrants and restrictions on “protected professions,” aim to address labor gaps. However, progress on judicial reforms and anti-corruption measures has stalled due to political gridlock, weakening investor confidence.

Investment Opportunities and Risks

The IT and healthcare sectors offer bright spots. Labor shortages have driven IT sector wages up 12% year-on-year, attracting foreign investment. Healthcare, buoyed by an aging population and EU funding for hospitals, is also expanding.

Yet, investors must weigh these opportunities against systemic risks. The zloty has depreciated 5% against the euro year-to-date, amplifying import costs. Meanwhile, Poland’s reliance on EU funding—€36 billion allocated through 2027—could dwindle if Brussels ties disbursements to reforms in judicial independence, which the government has resisted.

Conclusion: Navigating the Crosscurrents

Poland’s 3.5% growth forecast for 2025 reflects a precarious balancing act. Domestic demand and EU funds provide a foundation, but trade deficits, inflation, and U.S. trade policies pose clear threats. The economy’s reliance on global supply chains and imports leaves it vulnerable to further disruptions, while fiscal slippage and political inertia risk undermining long-term stability.

Investors should focus on sectors insulated from trade tensions, such as healthcare and IT, while monitoring macro risks. The zloty’s trajectory and U.S. trade policy direction will be critical indicators. With public debt nearing 58% of GDP and inflation still above target, Poland’s growth narrative hinges on whether it can navigate these crosscurrents—or become collateral damage in a global trade war.

As the IMF warns, “U.S. trade policies are a double-edged sword for Poland: they strain its trade balance but also incentivize diversification.” The question is whether Poland can leverage this pressure to build a more resilient economy—or fall prey to its own imbalances.