Poland's rapid defence spending surge tests its economic growth story
Poland has more than doubled its defence spending to nearly 5% of GDP since Russia's invasion of Ukraine, building a domestic arms industry, but economists warn the pace risks fiscal instability. The trend is also fuelling political division ahead of next year's election.
Poland is expanding its defence budget at one of the fastest rates among developed nations, driven by concerns over Russian aggression and reduced US commitment to European security. Since Russia's invasion of Ukraine nearly four years ago, Polish defence spending has more than doubled from 2.2% to 4.8% of GDP this year, reaching roughly $53bn — the fourth-highest total in the EU behind Germany, France and Italy.
North of Warsaw, a newly opened high-tech weapons facility now stands where a cornfield sat just two years ago. The head of the Polish subsidiary of European arms group MBDA says the country is shifting from importing weapons to manufacturing them domestically, creating local jobs in the process.
Economic backdrop
A senior Polish foreign ministry official argues that deepening economic ties with EU and Nato allies while building military readiness serves both security and economic goals, and helps deter further Russian aggression. Poland has enjoyed remarkable growth since its transition from communism nearly four decades ago, with living standards rising from 40% of the EU average in the mid-1990s to 81% last year. Annual economic output topped $1tn last year, with growth remaining among the fastest in the EU.
However, the defence spending boom carries costs. Poland is forecast to run the EU's largest budget deficit next year, at 7.1% of GDP, and Moody's recently downgraded the country's credit rating to its lowest level since 2002. Economists caution that the current spending trajectory is not sustainable without adjustments.
Political divisions
Defence policy, EU relations and support for Ukraine are becoming increasingly contentious ahead of next year's general election. Poland's president this year attempted to block the pro-EU government's access to EU defence loan funding, while nationalist politicians have staged protests against EU support for Ukraine. At the same time, Warsaw is partnering with international allies, including the UK, on new frigates and munitions plants, aiming to nearly triple artillery shell production by 2028.
