Growth will moderate to 3% in 2026 and 2.6% in 2027, reflecting headwinds from the evolving conflict in the Middle East and a peak in EU-funded investments. Inflation has increased in the first half of this year, but this will be temporary with underlying price pressures easing again at the end of the year and inflation falling to 2.7% in 2027. The labour market will remain solid with low unemployment. The economy remains exposed to risks from further energy price shocks and global demand, as well as geopolitical risks in the region.

Given the uncertainty of the impact of higher energy prices, any further easing of monetary policy should be postponed this year. The budget deficit remains high, reflecting elevated defence and social spending. Consolidation planned for 2026 and the following two years should be implemented and complemented by a long-term plan for the public finances. Energy price supports should be better targeted and phased out as soon as conditions allow. Given population ageing and wage pressures, greater upskilling and increasing the statutory retirement age would help to retain more people in the labour market. 

Economic performance has continued to improve over recent decades and picked up again after the pandemic, with Polish GDP per capita now 30% below the average of upper half of OECD countries. Although productivity still lags OECD levels, the country has seen considerable investment and productivity convergence. Both employment and participation rates have increased in recent years, while the unemployment rate has fallen to record lows.

To sustain growth, Poland will need to counter the headwinds of population ageing, by improving health outcomes, enhancing the skills of the working-age population and increasing further female employment. Strengthening competition in services, management of state-owned enterprises and insolvency regime can add a boost to business growth.

Czechia and Poland have experienced strong economic growth and significant improvements in living standards. Higher incomes and lower unemployment have put upward pressure on the demand for housing, while the supply has struggled to keep pace in many areas. The report analyses housing market trends in both countries and provides country-tailored recommendations to boost the supply of affordable housing and address the housing needs of vulnerable groups. The report presents strategies to unlock affordable housing development, including by facilitating the emergence of affordable housing providers, making more efficient use of spatial planning and land-based finance tools, and reforming property taxes. It also explores ways to adapt housing to meet the needs of an ageing population, mobilise existing buildings for affordable housing, and strengthen tailored housing solutions with integrated health and social services for people with higher support needs.