The Ministry of Finance forecasts that the general government deficit in 2025 will amount to 6.3% of GDP, and debt to 57.8% of GDP. Poland's GDP dynamics will amount to 3.7% this year, and inflation will be 4.5%. The forecast of the general government deficit for 2025 at 6.3% of GDP is worse than planned (by 0.8 percentage points).
According to the Ministry of Finance forecast, the deficit of the general government sector in 2025 will amount to 6.3 percent of GDP.
“The general government deficit in 2024 amounted to 6.6% of GDP. This is 1.3 percentage points higher than in 2023. The higher-than-expected deficit in the sector was significantly influenced by lower than expected revenues, in particular from VAT, and the acceleration of spending on rebuilding defense capabilities. It is forecasted that in 2025 the sector deficit will be reduced to 6.3% of GDP,” the release reads.
According to the forecast of the Ministry of Finance, the debt of the public sector in 2025 will amount to 57.8% of GDP, compared to 55.3% of GDP in 2024.
The Ministry of Finance lowered Poland’s GDP growth forecast for 2025 by 0.2 percentage points to 3.7 percent.
“In 2025, the domestic economy is expected to accelerate further – GDP growth in real terms will amount to 3.7%. This will result from an increase in domestic demand – an expected faster growth in private consumption and a return to positive investment dynamics, which will be influenced by an increase in defense spending, the implementation of projects from the National Recovery and Resilience Plan and other key public investments. Total investments are forecast to increase by 8.9% in real terms in 2025” – the Ministry of Finance wrote in a press release.
“Private consumption will increase by 3.3%, which will be associated with a real increase in disposable income and a slight decrease in the savings rate. The increase in disposable income will result from the continued good economic conditions and the labor market. The increase in public consumption in 2025 will amount to 3.2% and will be lower than in the previous year, among others due to the lower increase in labor costs in the public sector. The high growth rate in 2025 (above the potential GDP growth of 3.2%) will translate into a narrowing of the negative output gap to -0.2%, compared to -0.7% in the previous year,” it added.
The presented macroeconomic scenario was prepared without taking into account the tariff increases announced by the US government in early April this year (the end date of the forecast is the end of March, which is why this situation was listed as a risk factor for the scenario).
The direct and indirect impact on the Polish and European economies remains, in the opinion of the Ministry of Finance, difficult to predict and dependent on the final decisions of the US administration and the scale of the reaction of European countries and the rest of the world.
Due to the continued weak economic situation in EU countries, according to the Ministry of Finance, exports will increase by 2.4% in 2025. The rate of import growth will fall to 3.8%. As a result, the contribution of net exports to GDP growth in 2024 will amount to -0.5 percentage points.
In the opinion of the Ministry of Finance, the prospects of the Polish economy are burdened with great uncertainty regarding the situation in the external environment of the Polish economy (the impact of the US customs policy and its effects, as well as the possible escalation of the war in Ukraine, the economic situation in Germany).
Among the domestic risk factors, the Ministry of Finance mentions the use of EU funds, the further course of demographic changes and migration, which is also related to the situation in Ukraine.
The Ministry of Finance assumes that the average annual CPI will amount to 4.5% in 2025.
“The growth rate of consumer prices is forecasted to be 4.5% in 2025, compared to 3.6% in 2024. Energy prices, in particular gas prices for households, which have increased by 6% since January 1, 2025, will contribute to maintaining inflation above the NBP target. Energy prices for individual consumers will not change due to the development of commodity prices on global markets. Therefore, there will be no need to extend the shields,” it was written.
Similarly to consumer inflation, the GDP deflator forecasted by the Ministry of Finance will increase in 2025, reaching 4.1% in 2025, compared to 3.6% last year. Among the components of the GDP deflator, exports and imports will record lower price dynamics this year (after declines in both of these deflators last year), while the remaining deflators will achieve similar dynamics to the overall GDP deflator.
Unemployment in Poland is at a historically low level and according to the Ministry of Finance there is no indication that this trend will change.
“The BAEL unemployment rate will increase to 3.0% on average in 2025, compared to 2.9% on average in 2024, and will remain slightly above the NAWRU equilibrium unemployment rate of 2.7%. The number of employed people will fall by 0.1%, but this will primarily be due to a decrease in labour supply for demographic reasons (ageing population and negative migration balance) – it was added.
In the case of exchange rates, a technical assumption was made regarding the stabilization of exchange rates from the first quarter of this year at the levels of EUR/PLN 4.17 and USD/PLN 3.96 (average exchange rates from two weeks from 24.02 to 7.03.2025). Crude oil prices were adopted based on the average price of futures contracts from the first week of March 2025.
The government has adopted macro assumptions for 2025-2029, including inflation. “Surrounded by great uncertainty”
The Council of Ministers has adopted the Multiannual Macroeconomic Assumptions for 2025-2029, the Ministry of Finance announced in a press release. The Ministry of Finance forecasts that the deficit of the public sector in 2025 will amount to 6.3% of GDP, and the debt to 57.8% of GDP. Poland's GDP dynamics will amount to 3.7% this year, and inflation will be at 4.5%.
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2025 sector deficit forecast worse than planned due to lower tax revenue forecast
“The general government deficit is forecast to reach 6.3% of GDP in 2025. This means a reduction in the deficit in 2025 compared to 2024 at a level similar to the level of deficit reduction presented in the Plan,” the document reads.
“The forecast of the result for 2025 has deteriorated compared to the Plan by 0.8 percentage points. This is primarily due to the lower forecasted execution of revenues, in particular tax revenues. The lower forecast of tax revenues (mainly VAT) results, among others, from the lower execution of revenues in 2024, which reduced VAT revenues for subsequent years, and the revision of the macroeconomic forecast determining the tax base,” it added.
In turn, the current debt forecast for the public sector for 2025 is lower than assumed in the Medium-Term Budgetary and Structural Plan for 2025-2028 adopted last year.
“The public debt to GDP ratio according to the EU definition is expected to increase to 57.8% in 2025, which means that the debt reference value of 60% specified in the Treaty on the Functioning of the EU will not be exceeded. The increase in the debt to GDP ratio in 2025 will primarily be a consequence of the borrowing needs of the state budget and funds established in the Bank Gospodarstwa Krajowego, mainly the Armed Forces Support Fund, and the rate of nominal GDP growth,” it was written in the report on the implementation of the plan.
“The higher ratio of the general government debt to GDP in 2024 compared to the forecast in the Plan resulted primarily from the higher debt of the State Treasury, which was largely the effect of lower than forecasted in the Plan cash execution of revenues. The lower forecast ratio in 2025 compared to the Plan is mainly the effect of a decrease in financial resources in the state budget accounts accumulated in 2024 due to lower than planned execution of borrowing needs in 2024 and the formation of nominal GDP growth” – it was added.
In the Medium-Term Budgetary and Structural Plan for 2025-2028 adopted last year, the Ministry of Finance assumed that the debt of the public sector would amount to 58.4 percent of GDP in 2025. Now the forecast indicates a debt of 57.8 percent of GDP this year.
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