(Bloomberg) -- Poland’s economy is set to expand by nearly 4% next year amid expectations for inflows of European Union aid and lower domestic interest rates, according to Finance Minister Andrzej Domanski.
The 2025 view signals an upgrade from the government’s growth forecast of 3.7%. For this year, Domanski said he’s “comfortable” with growth “at around 3%,” compared with a 3.1% target in the budget.
“I expect that 2025 will be the year when the impact of EU recovery funds will be the biggest,” Domanski told Bloomberg News. “I’d also assume that monetary policy will be looser — contracts show that the market is pricing in rate cuts for next year.”
While Poland’s central bank has held its benchmark this year at 5.75% and Governor Adam Glapinski has said this position may hold until 2026, other policymakers have signaled they are open to reducing borrowing costs next year. Derivatives used to bet on rate levels show expectations for about 90 basis points in easing over the next 12 months.
For the time being, Domanski said Poland’s $800 billion economy is held back by weak development in the euro region as well as “restrictive monetary policy and uncertainty observed on the markets.” Next year, however, growth will be “closer to 4%,” he said.
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Domanski said accelerating growth will help Poland keep its budget deficit “under control” next year. Macro assumptions for the 2025 fiscal plan — which will include funds to further ramp up defense spending as well as expenditures related to plans to construct the country’s first nuclear power plant — will be announced later this month, he said.
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