December 22, 2023

Election outcomes bring optimism into the Polish stock market, experts report

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December 12, 2023, Warsaw, Poland. Prime Minister Donald Tusk before the vote of confidence.

Picture by: MPiPS | Flickr

Economists believe that the recent significant political shift in Poland and the decline of the Law and Justice Party (PiS) following its eight-year tenure, breathed new life into investor confidence and local businesses, fostering hope that independent financial institutions would regain functionality.

In October 2023, PiS failed to secure a majority in the Lower House of Parliament. The election’s aftermath saw a remarkable surge in the Polish financial markets, with shares, bonds and the Polish zloty experiencing strengthening, marking a turning point in the country’s economic landscape.

Economist Katarzyna Polanska, an LSE graduate, emphasised that the investors were “naturally threatened” for the last eight years, as “financial institutions were often influenced by the Polish government.”

An illustrative example is the decision of the Polish Central Bank just before the parliamentary election, where it reduced interest rates by 0.75 percentage points despite an inflation rate of 8.4%. Speculation arose that PiS had influenced this decision to sway voters in their favour.

Apart from PiS’s notorious economic policies, its tenure was notable with controversial justice and social reforms.

“The result of the parliamentary election gave investors hope that such practices are going to change and thus we could see the wave of optimism spread across the Polish stock market,” the expert told Harbingers’ Magazine.

The decline of PiS rejuvenated investor confidence and Polish businesses. The entire Polish stock exchange “went green” – experiencing a positive upturn, with the overall value of stocks increasing and their prices rising – immediately after the election results were announced, making Polish stocks and bonds among the most rapidly growing assets in Europe throughout October 2023.

The subsequent Monday witnessed a remarkable turnover on the stock exchange, reaching nearly PLN 3.3 billion, the third-highest result in the history of the Warsaw Stock Exchange. The WIG20 index, representing the 20 largest joint-stock companies, grew by 5.3% at the close of the first post-election session.

Further positive trends continued, with WIG20 experiencing a substantial 23.5% increase in base value between October and December 2023. The Polish Zloty also appreciated, with $1 dropping from PLN 4.38 in October to PLN 4.03 in December.

Increased valuation of companies listed on the Warsaw Stock Exchange, suggested a rapid gain in value for Polish firms. Polanska explained that a company’s valuation is tied to the sum of its future profits.

“Therefore, if we scale our analysis down, we have a firm that expects an increase in their revenues and it usually creates an incentive for investment,” she said.

On a broader scale, Polanska added, this translates into business growth, increased innovation, and overall economic expansion for Poland in the foreseeable future.

Piotr Bartkiewicz, economist of Bank Pekao, also shared this forecast. “In the fourth quarter of this year, Poland can expect the culmination of the investment spurt and greater increases in consumption. This would be enough for economic growth to reach 1.5-2%,” he said.

Among possible economic effects of elections, Polanska mentioned increased money flows from abroad. She predicted how “such inflow of foreign capital could facilitate further investment in Polish firms and capital goods, leading to long-term economic growth.”

These projections are fueling optimism for Poland’s economic landscape but ongoing political developments may cause further fluctuations in the Polish Stock Exchange.

The transition of power remained protracted even after the elections, as PiS prolonged the election of the Prime Minister and his government for nearly three months.

December 11 marked a significant turning point when Mateusz Morawiecki from PiS, earlier appointed as Prime Minister by President Andrzej Duda, failed to secure a vote of confidence from the parliament. Subsequently, he was replaced by Donald Tusk from the Civic Coalition Party, which might present an opportunity for a fresh start for Poland’s economic journey.

Written by:


Nadia Diakowska

Economics Correspondent

Warsaw, Poland

Born in 2005, Nadia is a graduate of Stefan Batory High School in Warsaw, currently taking a gap year to complete A-levels.

Her main interests include economics, mathematics and psychology. In the future, Nadia plans to study economics and management in the UK.

Edited by:


Timur Boranbayev

Economics Section Editor

London, United Kingdom


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