Poland’s Economic Ascent: Will it surpass Germany?

As several European Union member states struggle with stagnation and recession, one country is defying the broader economic slowdown: Poland.

With a projected GDP growth rate of nearly 3% in 2024, the Polish economy is outperforming both France and Germany, which have recorded growth rates of 1.2% and –0.2%, respectively.

Poland’s economic indicators for 2025 remain promising, as the country registered a 0.8% GDP growth in the second quarter, placing it fifth among EU nations.

Overall growth is expected to reach 3.3% this year and maintain around 3% next year.

This momentum isn’t a recent phenomenon—since joining the EU in 2004, Poland’s annual growth has averaged about 4%.

The country’s stock market is thriving, and investor confidence continues to grow.

“Poland has shown clearly above-average performance over the past two decades. Real GDP has doubled, which is remarkable,” said Katarzyna Rzętarzewska, Senior Macroeconomic Analyst for Central and Eastern Europe at Erste Group.

According to Jacob Funk Kirkegaard of the Peterson Institute for International Economics, Poland’s trajectory mirrors that of other Eastern European and Baltic nations—but with one crucial distinction: its size.

“Poland is big, and that makes it significant at the EU level, both politically and economically,” he noted.

Home to 37 million people, Poland is the fifth-largest country in the EU and ranks among the world’s top 20 economies by GDP.

Its growing economic weight is also strengthening its strategic and geopolitical influence.

Defense spending has surged to around 4.5% of GDP, much of it directed toward foreign procurement.

Still, domestic growth is primarily driven by private consumption, according to Rześniewski, who calls it “the backbone of growth”.

Rising wages and falling unemployment are fueling consumer spending, leaving Poland relatively insulated from external economic shocks.

“In a global recession, small export-driven economies are hit first… But in Poland’s relatively closed economy, strong domestic consumption continues to sustain growth,” Rześniewski said.

Experts credit much of Poland’s success to its effective integration into Western institutions.

“Poland has truly succeeded in integrating into the EU, NATO, the Schengen Area, and the OECD,” said Rzętarzewska.

While Poland hasn’t adopted the euro, it has greatly benefited from EU funding since 2004.

“Access to European funds has been crucial to Poland’s development,” she added.

Kirkegaard echoed this sentiment: “Poland used EU funds effectively to modernize its infrastructure, combat corruption, and create a business-friendly environment… With a well-educated workforce, Poland is a textbook case of successful EU integration”.

Despite its success, Poland remains politically divided, as the conservative Law and Justice (PiS) party and the liberal Civic Alliance led by Prime Minister Donald Tusk represent two opposing blocs.

Tusk’s government, seen as more EU-aligned, secured €137 billion in EU funding in 2023 by committing to judicial reforms that meet EU standards.

However, his reform efforts have clashed with President Karol Nawrocki, a Euroskeptic backed by PiS.

Rzętarzewska believes Poland’s resilience transcends political partisanship: “Poland shows that strong growth is achievable under both conservative and liberal governments”.

Generous social programs, such as child benefits introduced by PiS, have supported domestic demand but also strained the national budget—especially amid increased defense spending and post-pandemic inflationary pressures.

Finance Minister Andrzej Dumański projects that the budget deficit will reach 6.5% of GDP by 2026.

Still, analysts remain optimistic, “Rating agencies and investors are not worried because growth remains strong,” said Rafal Benecki, Chief Economist at ING Poland, “but the government needs a credible fiscal plan to maintain confidence”.

Rześniewski cautioned that austerity measures could slow growth but maintained that Poland’s fundamentals remain solid: “Low unemployment, robust consumer confidence, and high productivity justify the current optimism”.

While Poland’s economy continues to expand, neighboring Germany faces its longest economic crisis in decades.

New data from the ifo Institute shows that government spending has risen by 25% since 2015, but private investment has fallen to 2015 levels, and GDP has remained virtually stagnant since 2018, and the unemployment reached 3 million in August 2025, the highest in a decade.

“Germany is experiencing a continued economic decline,” warned Clemens Fuest, President of the ifo Institute.

“Falling private investment will weaken growth and reduce tax revenues, limiting the government’s ability to finance public services… Millions of Germans are already feeling a drop in living standards”.

Fuest urged Chancellor Friedrich Merz’s government to introduce a comprehensive reform package within six months—including social policy reforms, cutting costly programs like the “mother’s pension,” and reducing bureaucratic red tape to stimulate investment.

Even members of Merz’s own Christian Democratic Party acknowledge the urgency… Party Secretary-General Carsten Linnemann admitted: “We must take Fuest’s warnings seriously… The motto of the moment is clear: the Mittelstand must come first”.

As Germany grapples with stagnation, analysts suggest a potential eastward shift in Europe’s economic balance.

Kirkegaard argues that Poland’s continued dynamism could reshape the EU’s economic landscape: “If Germany remains unreformed while Poland continues its current trajectory, we may see a reversal reminiscent of America’s Rust Belt story—where once-dominant regions fall behind more dynamic competitors”.

Whether Poland will ultimately surpass Germany remains uncertain—but one thing is clear: Europe’s economic map is changing, and Poland is emerging as a driving force behind that transformation.