EY report: Poland is growing three times faster than the euro zone, leading larger EU economies

Poland is expected to grow nearly three times faster than the euro zone this year, according to EY’s latest European Economic Outlook. The report says Polish GDP will expand by close to 4%, placing the country among the strongest performers in the European Union’s larger economies.

EY expects euro zone growth, excluding Ireland, to reach 1.2% year on year this year and 1.3% next year. That compares with growth of 0.9% in 2024 and 1% in 2025. Economists say Europe has survived recent shocks better than expected, helped by resilient trade, investment linked to artificial intelligence and Germany’s fiscal expansion.

If energy prices gradually ease, euro zone inflation should move closer to the European Central Bank’s target next year, reaching roughly 2% to 2.1% from the second quarter. EY expects the ECB to raise interest rates by 25 basis points in September, then cut them twice by the same amount in the second half of 2027 as headline and core inflation decline.

“

The biggest threat to the European economy remains the conflict in the Middle East and the prolonged closure of the Strait of Hormuz.

For Poland, EY projects inflation to fall gradually from around 3.5% over the coming quarters toward the National Bank of Poland’s 2.5% target from the second half of 2027. The analysts estimate that the Middle East conflict is adding 1.5 percentage points to domestic inflation. They therefore see no case for a Polish rate cut in 2026, but forecast cuts totaling 50 basis points in 2027, bringing the reference rate to 3.25%.

The outlook remains vulnerable. Maciej Stefański, a senior economist at EY Poland, says the Middle East conflict and a prolonged closure of the Strait of Hormuz pose the biggest risks to Europe’s economy. Marek Rozkrut, EY’s chief economist for Europe and Central Asia, says the risk balance is “strongly asymmetric” and that a worse scenario is much more likely. Longer disruption could push up commodity prices, increase inflation and weaken economic growth.

“

The risk balance of our forecast is strongly asymmetric, and a worse scenario is much more likely.