Polish economy grows 0.8% in Q2, showing resilience amid trade challenges

Poland's economy expanded by 0.8% quarter-on-quarter in Q2 2025, slightly below the 1.0% consensus but maintaining solid momentum following Q1's 0.7% growth. Strong retail sales, up 2.5% q-o-q, and resilient industrial production, increasing 1.0% q-o-q, highlight consistent sector performance. This growth trajectory, despite ongoing trade challenges and US tariffs, reinforces Poland's position as a top-performing EU economy, demonstrating its resilience amidst evolving global market conditions.

Analysis

Poland's economy demonstrated sustained momentum in the second quarter of 2025, with a quarter-on-quarter GDP expansion of 0.8%. While this figure fell slightly short of the 1.0% consensus forecast, it builds upon the 0.7% growth recorded in the first quarter, indicating a stable economic trajectory. The underlying data reveals significant strength in key sectors, mitigating the headline miss. Retail sales grew by a robust 2.5% over the quarter, highlighting strong consumer demand as a primary driver of the economy. Furthermore, industrial production showed notable resilience with a 1.0% quarterly increase, suggesting that the Polish industrial base has so far weathered the impact of US tariffs effectively. This combination of strong domestic consumption and a durable industrial sector supports the view that Poland is positioned to be a top-performing economy within the European Union for the year, successfully navigating broader global trade uncertainties.

Key Decisions for Investors

• The demonstrated economic resilience and strong domestic consumption support a constructive outlook on Polish-exposed assets, suggesting the slight miss on headline GDP should be viewed in the context of robust underlying fundamentals.
• Investors should monitor high-frequency data, particularly retail sales and industrial production figures, to verify that the current momentum driving Poland's relative outperformance is sustained into the second half of the year.
• While the impact from tariffs has been limited, any escalation in trade tensions remains a key risk factor to watch, as it could challenge the recent resilience of the industrial sector.