Productivity gains to power Polish city growth

Polish cities have been among the fastest-growing in Europe over the past 25 years, and we expect Warsaw—along with Kraków, Wrocław, and Gdańsk—to remain among the continent’s strongest performers in the decade ahead. Manufacturing has built the foundation of strong growth since the turn of the century, but ICT, finance, and business services are becoming increasingly important for driving productivity gains and propelling Poland’s major city economies to the top of Europe’s leaderboard.

Automotive manufacturing has seen particularly strong growth, but activity has been broad-based, with robust growth across subsectors and regions. Places on the periphery of cities have been central to these trends and helped catalyse wider activity—especially in the transport & storage sector, where firms have benefitted from strategic proximity to major hubs. Meanwhile, major cities have complemented this activity with a rapid expansion in advanced services like tech and finance, diversifying the economy, increasing resilience, and boosting employment.

The move up value chains across sectors has led to a large increase in productivity, raising living standards and closing the income gap with western peers. This has also led to rapidly expanding consumer markets, with Warsaw set to overtake more established markets like Brussels and Hannover in size by 2050.

Previous outward flows of labour are now starting to partially reverse, with some skilled workers now returning to the higher wage jobs found across Poland’s cities. This is coinciding with continued urbanisation, rising incomes, and higher construction costs to significantly raise house prices over the past 10 years, with average prices across Poland’s major cities now double those in 2015. We expect this trend to continue as climbing incomes and the falling size of average households create further demand.