Poland’s economy resilient to Middle East woes
Per the full note , Poland's economy is demonstrating resilience in the face of external shocks from the recent conflicts in the Middle East. The country’s GDP accelerated to 3.8% year-on-year in the second quarter of 2026, driven by a rebound in industrial activity and construction following a tough first quarter. Despite the pressures of rising fuel costs, there remains cautious optimism regarding inflation and GDP growth, which could lead to stable monetary policy through 2026 and potential cuts in 2027 as investment activity picks up, particularly aided by EU funding.
What the desk is arguing
The desk's thesis is that Poland's economic performance suggests underlying strength that could shield the currency from geopolitical tensions. The commentary highlights a GDP growth increase to 3.8% YoY in Q2 2026, signaling a potential turnaround after the adverse impacts of both weather and international energy price shocks.
Investment activity is projected to remain robust, aided by EU funding mechanisms such as the Recovery and Resilience Facility, which could foster stronger economic foundations going forward. This insight could shift how FX traders perceive the PLN, especially if inflation remains manageable while GDP continues to grow.
Where it sits in our coverage
Our consensus target for the EUR/PLN sits at 1.075, with a range from 1.04 to 1.12. Specific firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
The desk's interpretation aligns well with the consensus, resting near the middle of the expected range, signaling that traders might view Polish economic resilience favorably in the coming months.
How other firms see it
Overall, firms like jpmorgan see the bullish case for the PLN strengthened by current economic data, while bofa presents a contrary viewpoint, indicating caution due to external economic factors. The EUR/PLN pair will be critical to watch as it reflects the dichotomy between the optimism surrounding Poland's economic recovery and the broader geopolitical risks in the region.
What the calendar says
With no significant events on the immediate calendar, traders should monitor upcoming inflation data and any commentary from the National Bank of Poland, as insights on monetary policy adjustments could have notable implications for the PLN.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Poland's GDP growth accelerated to 3.8% YoY in Q2 2026.
- 02Inflation remains well within target, allowing for potential monetary policy stability.
- 03Investment activity is rising, bolstered by EU funding initiatives.
- 04Geopolitical risks from the Middle East pose a moderating threat but have not yet derailed economic progress.
Market implications
Traders should look for the EUR/PLN to reflect the economic resilience of Poland, especially any movements around the 1.075 consensus target as new economic data emerges. Additionally, any comments from the National Bank of Poland regarding interest rates could be pivotal triggers for positioning.
Risks to this view
Key risks to this outlook include a sharp escalation of geopolitical tensions that disrupt energy supplies or a significant deterioration in inflation control, which could prompt the NBP to adjust interest rates preemptively.
Articles Poland’s economy resilient to Middle East woes Published 13:15 Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Despite global headwinds stemming from the energy shock triggered by the conflict in the Middle East, Poland’s economic conditions improved in the second quarter and GDP accelerated. Inflation also remains within the central bank target. Monetary policymakers are likely to keep rates on hold for the rest of 2026, but 2027 may bring cuts Adam Antoniak Poland posts solid economic growth in the second quarter Stronger GDP growth in 2Q26 Although the second quarter of 2026 saw an outbreak of military conflict in the Middle East, which triggered a spike in oil and natural gas prices, Poland's economic performance improved as construction and industrial activity rebounded following a difficult first quarter, when adverse weather conditions weighed on growth.
According to the flash estimate, GDP growth accelerated to 3.8% YoY from 3.5% YoY in 1Q26, as stronger investment activity more than offset a further slowdown in private consumption. Seasonally adjusted data suggest that the economy gained momentum, with growth accelerating to 0.9% QoQ from 0.6% QoQ in 1Q26. Polish economy accelerates in 2Q26 GDP growth, QoQ SA Source: GUS. "> Source: GUS.
The Statistical Office will publish the detailed GDP breakdown at the end of the month, but we estimate that consumption growth slowed further as pressure on household budgets intensified. Wage growth continued to moderate, while rising petrol and diesel prices left less room for other spending. At the same time, investment activity gained momentum as the absorption of EU funds, including resources from the Recovery and Resilience Facility (RRF), accelerated.
We remain confident in our forecast of 3.4% GDP growth in 2026. Inflation up, but price pressure still contained The final reading of July CPI inflation confirmed that consumer price growth accelerated to 3.0% YoY from 2.5% YoY in June. However, the increase was driven almost entirely by a renewed surge in fuel prices following the restoration of the standard 23% VAT rate from the temporarily reduced 8% rate and the removal of the fuel price cap at the beginning of July.
Combined with higher oil prices after the collapse of the Memorandum of Understanding (MoU) between the US and Iran, this pushed retail petrol and diesel prices in Poland up by 15.8% MoM. As a result, annual fuel price inflation accelerated to 7.0% YoY in July from 1.3% YoY in June, contributing around 0.5-0.6 percentage points to headline CPI inflation. Fortunately, price pressures remain subdued elsewhere in the basket.
Housing energy inflation eased slightly, reflecting lower prices of liquid fuels compared with June, while food price inflation continued to decline. In the food category, disinflationary pressures appear broad-based, with another month of MoM declines in the prices of meat, livestock products, fruit and vegetables. In addition, fierce competition among Poland's leading retail chains continues to exert downward pressure on consumer prices.
Inflation up mainly on the back of fuel prices CPI inflation, % YoY, perc. points. Source: GUS, ING. "> Source: GUS, ING. We estimate that core inflation excluding food and energy edged up by 0.1pp to 3.1% YoY in July from 3.0% YoY in June, but we see no signs of broad-based upward pressure on prices.
Annual inflation in the information and communication category increased slightly, driven by higher prices for computers, data storage devices and mobile phone services. However, this appears to reflect the global AI boom rather than higher energy costs. Elsewhere, month-on-month price increases were either directly linked to higher fuel costs, such as the jump in air fares, or were largely seasonal in nature, including air conditioners, recreational vehicles and caravans.
Headline inflation remains within the central bank's target range of 2.5% ±1 percentage point despite the increase in fuel prices, and we believe that neither the current inflation picture nor the outlook warrants a monetary policy response. In our view, underlying price pressures remain contained, supported by moderating wage growth and a cooler labour market. Central bank rates to stay on hold in 2026 but room for cuts in 2027 In the coming months, we expect inflation to continue rising at a moderate pace, which should lead to the National Bank of Poland (NBP) keeping interest rates unchanged at the current level of 3.75%.
Although NBP Governor Adam Glapiński indicated in July that the central bank might be prepared to ease monetary policy after the summer, the remaining members of the Monetary Policy Council (MPC) have been considerably more cautious in this regard. We do not expect NBP interest rate cuts until mid-2027, when inflation may fall below the central bank's target. Our baseline scenario assumes two 25bp rate cuts in May and June, bringing the reference rate down to 3.25%.
NBP rates GDP CPI inflation Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Adam Antoniak Senior Economist, Poland Adam has about 20 years of experience in macroeconomic research.
He has worked for leading financial institutions in Poland (Bank Pekao, Bank BPH), and members of international financial groups… In this article Stronger GDP growth in 2Q26 Inflation up, but price pressure still contained Central bank rates to stay on hold in 2026 but room for cuts in 2027
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