The Middle East conflict is weighing on Poland's economy

The escalation in the Middle East could significantly worsen Poland’s economic outlook. 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 March 9, the bank describes a stress scenario in which geopolitical tensions persist and key energy and trade routes remain disrupted.

Oil prices as a key risk factor

The global energy market is at the center of these risks. Should prolonged disruptions occur in the Persian Gulf—such as a temporary blockade of the Strait of Hormuz or damage to oil infrastructure—commodity prices could rise significantly.

According to mBank, such a shock would initially manifest through higher energy prices and subsequently slow down the entire economy. Fuel prices could react particularly strongly: Analysts already anticipate potential price increases of around 16 to 18 percent in the short term.

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

Growth Loses Momentum

In the bank’s baseline scenario, the Polish economy remains robust for the time being. For the third quarter of 2026, analysts expect growth of just over four percent year-over-year.

Under a stress scenario, however, momentum would weaken. Growth could slow significantly by the end of 2026 and continue to decelerate throughout 2027.

Economists see risks of a weaker economy particularly at the start of 2026—including potential weather-related disruptions to the economy.

Inflation remains elevated

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

According to the bank’s assessment, the inflation rate could already exceed previous forecasts in 2026 and rise further in early 2027.

Interest rate cuts are a distant prospect

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

Analysts at mBank now consider this scenario unrealistic. Instead of further rate cuts, they expect interest rates to remain stable at current levels.

Persistent geopolitical risk premium

Even if the situation in the Middle East calms down again, the effect on the markets could persist for some time. The bank expects that a geopolitical risk premium could remain in place in the energy markets.

This would mean that oil prices would remain higher than before the escalation for an extended period—with corresponding consequences for inflation and growth in Europe.