In Poland, construction output fell by 9.6% YoY in October, following a decline of 9.0% YoY in September, confirming that the sector remains in a deep recession. Seasonally adjusted data points to a 2.7% month-on-month decline.

The deterioration is broad-based. Civil engineering fell by 10.2% YoY, dwellings construction declined by 7.9% YoY, and specialized works were 10.4% YoY down in October. The sharp decline in investment works (11.9%YoY) shows that investment activity in the Polish economy remains subdued, while restoration works performed better.

The first signs of a recovery in the construction sector are expected in 2025. By then, EU funds, including structural funds contracted this year and those directed towards construction under the National Recovery Plan (RRF), will start flowing into the economy more broadly. ING estimates that final beneficiaries will receive some PLN15-20bn this year, but the amount should jump to at least PLN60bn next year. The structural fund’s absorption is also likely to accelerate.

In the housing market stagnation reigns, with an oversupply of flats and an increasing tendency among developers to lower prices after their significant rise in 2023 and early 2024. The budget has also seen many new expenditures, so the stimulus program for the housing market has dropped from the agenda.

In this scenario, Poland is lagging in the fight against inflation, as shown by the core inflation forecasts for 2025. Moreover, the Russia-NATO tensions restrain investment decisions.