Polish economic activity jumped by 0.8% in the 3rd quarter. On an annual basis, GDP growth climbed to 3.7%. This is the best performance since 2022, during the post-COVID economic catch-up.
Household consumption remains the main driver of the economy. It is dynamic thanks to a low unemployment rate and rising real incomes. Contained inflation has also allowed the Central Bank to sharply reduce its key rate, from 6.75% in 2023 to 4.25% today. This has made credit cheaper and supported domestic demand.
Improvements in the construction sector and business investment can also explain the Polish economy's outstanding performance in recent months. The industry is also getting closer to emerging from the crisis that has been at work in recent years.
Thanks to the strong demand from its large domestic market, the Polish economy will remain dynamic in the coming quarters. Given the close economic ties between the two countries, it could also benefit from Germany's strong fiscal stimulus.
An exception in Europe
With growth expected to exceed 3% this year and in 2026, the Polish economy is much more dynamic than the Eurozone, which will have to settle for a figure close to 1%.
These good prospects are not yet fully priced into the valuation of Polish equities. With a price-to-earnings ratio of just over 12, they are cheap. Buy 5% Polish stocks, regardless of your risk profile, and see our complete asset allocation strategy here.