Poland Has Emerged From a 19-Year Stagnation: What Is Driving the Growth of Its Economy and Market

Poland's economy surpassed $1 trillion last year, and its stock market is currently experiencing one of its strongest growth periods since 2007. What led to this outcome?

Poland is the fastest-growing major economy in the EU—the country’s GDP exceeded $1 trillion last year. And its stock market has tripled in size over the past four years.

This year, the WIG20—an index of the largest companies on the Warsaw Stock Exchange (which, in the 1990s, was housed in the former building of the Central Committee of the Polish Communist Party as a symbol of the transition from socialism to capitalism), outperformed the indices of the U.S., Europe, and emerging markets.

The WIG20 has gained nearly 30% since the start of the year, while the S&P 500 has risen 11.76%, the pan-European STOXX Europe 600 has risen 6.6%, and the MSCI Emerging Markets Index has risen more than 20%.

A four-year rally has finally pulled the WIG20 out of its 19-year-long "sideways trend": this summer, the index surpassed its 2007 high.

The 1990s and early 2000s were a boom period for the market: the privatization of large state-owned enterprises and banks attracted millions of individual investors. The rise in stock prices, fueled by a surge of interest from international investors in emerging markets in the early 2000s, also played a major role.

The 2008 global financial crisis brought the boom to an end, and interest from private investors peaked 16 years ago, when 323,000 people bought shares in the Warsaw Stock Exchange during its IPO.

Bloomberg notes that government actions played a role in this market behavior. In the 2010s, the government implemented a pension reform in which pension funds lost approximately half of their assets. These funds have traditionally been among the stock market’s main participants. The government then forced a number of state-owned companies to amend their charters and prioritize political goals over corporate ones, which undermined corporate governance standards and reduced dividends.

The situation has changed in recent years—thanks to reforms and a desire to attract private investment. In 2025, Finance Minister Andrzej Domański, a former investment manager, introduced tax incentives aimed at reviving a “culture of investing in stocks.”

The favorable economic outlook may also contribute to this. Poland’s GDP grew by 3.6% last year, the highest rate since 2022. By comparison, the European Union’s GDP grew by only 1.5% over the same period. Poland is now Europe’s sixth-largest economy, trailing only Germany and France, as well as Italy, Spain, and the Netherlands.

A significant portion of Poland's economic growth is driven by domestic consumption—which is its main driver (in addition to the use of EU funds for infrastructure).

For now, foreign investors—drawn by economic growth and rising corporate profits—remain the main players in the market, notes Bloomberg. According to data from the Warsaw Stock Exchange, non-residents accounted for a record 73% of stock trades in the first half of the year. Their interest remains high, said the exchange’s CEO, Tomasz Bardzilowski, in early September.

All of this prompted S&P Dow Jones Indices to announce in August that it would reclassify the Polish market from emerging to developed. The changes will take effect in September 2027.

Another index provider, FTSE Russell, reclassified Poland as a developed market back in 2018. It became the first country in Central and Eastern Europe to achieve this status.

The third major industry player, MSCI, has not yet done so; it generally takes a more cautious approach, still classifying even the South Korean market as emerging.

Poland accounts for 1.3% of the S&P Emerging Markets Index, while its share in the S&P Developed BMI will be about 0.15%. However, the assets of funds focused on the latter are 8 to 9 times greater than those of emerging market funds, according to the Polish Economic Institute.

Bardzilovsky also hopes that the discount relative to developed markets will narrow as prices continue to rise: “We’ve grown accustomed to Poland trading at a discount, but now that it is moving into the category of developed markets, the rationale for such a discount is becoming less compelling.”

Poland is already home to international companies such as the online marketplace Allegro.eu. In 2020, it conducted what was then the largest IPO, becoming the country’s largest publicly traded company with a market capitalization of approximately $19 billion at the end of its first day of trading.

However, after peaking at 90 zlotys, Allegro’s stock fell over the course of two years and entered a sideways trading range with a resistance level around 40 zlotys—a level it failed to break through on several occasions. Among the reasons were high costs associated with international expansion, which eroded profits. Specifically, in 2022, the company acquired Mall Group, gaining access to the markets of the Czech Republic, Hungary, Slovakia, Slovenia, and Croatia. It sold the latter two loss-making divisions in 2026.

And in July, its stock finally broke through the 40 zloty mark, rising to 49.44. Jon Trisi, publisher of the investment newsletter Fuller Treacy Money, calls this dynamic a “breakout from the base” and a strong signal for further sustained growth. Over a long period, the price fluctuates around roughly the same level, forming a “base” where the forces of buyers and sellers are in balance. A breakout from this base signals a fundamental shift in favor of buyers, after which the price rarely returns to its previous range.

Among analysts, 11 have a “Buy” or “Outperform” rating on Allegro stock, and 5 have a “Hold” rating.

Since the beginning of the year, Allegro's stock price has risen by 60%. The situation regarding consumer spending, on which its business largely depends, remains fairly favorable.

Although growth in consumer spending slowed in the second quarter compared with the first (2.8% versus 3.3% on an annualized basis), partly due to rising fuel prices, households have significantly increased their savings rate in recent quarters, notes Adam Antoniak, ING’s senior economist for Poland. In doing so, they have built up a financial reserve that allows them to maintain relatively steady spending growth even if disposable income growth slows further.

Overall, the economy grew by 3.9% in the second quarter, following 3.5% growth in the first quarter. Next year, GDP growth is forecast to exceed 3% again—for the sixth time in the past seven years—so economic support for the stock market is assured, Bloomberg notes.

Shares of energy companies PGE and Orlen performed well, thanks to rising oil prices and profit margins in refining. However, because of this, the government is attempting to introduce a tax on their excess profits this year to offset the rise in retail fuel prices. The Polish president vetoed the bill on such a tax in July, but on September 15, the government announced that it would resubmit it.

Orlen's stock price has jumped by more than 57% since the beginning of the year. Three analysts have given it an "Outperform" rating, three others recommend holding, and two recommend selling.

The financial sector is also doing well. The Central Bank of Poland has kept its interest rate at 5.75% since the end of 2023. This has provided banks with high interest income. But starting in 2024, the regulator began lowering the rate, bringing it down to 3.75% in the spring of 2025. For now, it plans to keep the rate at that level.

Lukasz Janczak, an analyst at Erste Bank, told Reuters that large banks are offsetting the potential loss of interest income resulting from the rate cut by increasing lending, which has become more accessible.

“The overall macroeconomic situation in Poland will contribute to an improvement in the banking sector’s financial results in 2026,” noted Pekao, Poland’s second-largest bank, in its first-quarter report.

Shares of the country’s largest bank, PKO Bank Polski, traded in a sideways range for 20 years following its 2004 IPO, after which they broke out of that range and rose nearly 2.5-fold, including an increase of about 40% this year. Seven analysts have issued “Buy” and “Outperform” recommendations, while six have issued “Hold” recommendations.

This article was AI-translated and verified by a human editor