Middle East conflict weighs on Poland's economy

The escalation in the Middle East could significantly worsen Poland's economic prospects. Analysts at mBank warn that rising energy prices and disrupted trade flows could both fuel inflation and dampen economic growth in the coming years.

In an analysis published on 9 March, the bank describes a stress scenario in which geopolitical tensions last longer. In an analysis published on 9 March, the bank describes a stress scenario in which geopolitical tensions persist for longer and key energy and trade routes remain impaired.

Oil prices as a key risk factor

The global energy market is at the heart of the risks. Should there be prolonged disruptions in the Persian Gulf - for example due to a temporary blockade of the Strait of Hormuz or damage to oil infrastructure - commodity prices could rise significantly.

A shock of this kind would, according to mBank, first have an impact via higher energy prices and then slow down the entire economy. Fuel prices could react particularly strongly: Even in the short term, analysts anticipate possible price increases of around 16 to 18 percent.

Supply chains could also be affected, which in turn would have an impact on food prices and other consumer goods.

Growth loses momentum

In the bank's base scenario, the Polish economy remains robust for the time being. For the third quarter of 2026, analysts expect growth of a good four percent compared to the previous year.

Under a stress scenario, however, the momentum would weaken. Growth could slow significantly by the end of 2026 and slow further over the course of 2027.

Economists see risks of a weaker economy, particularly at the start of 2026 - due to possible weather-related disruptions to the economy, among other things.

Inflation remains elevated

While growth could be weaker, inflation would move in the opposite direction. Rising energy prices would push up consumer prices significantly more than previously expected.

According to the bank's estimates, the inflation rate could already exceed previous forecasts in 2026 and increase further in early 2027.

Interest rate cuts are becoming a distant prospect

The changed inflation outlook also has consequences for monetary policy. Until recently, it was considered possible that the key interest rate in Poland could fall significantly in the medium term.

The analysts at mBank now consider this scenario to be unrealistic. Instead of further rate cuts, they expect interest rates to remain stable at the current level.

Permanent geopolitical risk premium

Even if the situation in the Middle East calms down again, the effect on the markets could last longer. The bank assumes that a geopolitical risk premium could persist on the energy markets.

This would mean that oil prices would remain higher than before the escalation for a longer period of time - with corresponding consequences for inflation and growth in Europe.

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