Ukraine’s diplomatic standing with the U.S. suffered a major blow over the weekend after a dramatic confrontation between President Volodymyr Zelenskyy and both U.S. President Donald Trump and Vice President JD Vance at the White House.
The high-stakes dispute resulted in the collapse of a key U.S.-Ukraine agreement that could have marked a step toward peace, sending shockwaves through global markets and sparking concerns over Kyiv’s future without Washington’s financial and military backing.
The fallout was immediately visible on stock exchanges. On Monday, shares of Ukrainian companies listed on the Warsaw Stock Exchange plummeted, with some falling by double digits. Coal Energy, a major player in the sector, initially tumbled more than 20% before recovering some of its losses.
The reaction extended beyond Ukraine-linked assets. Shares of the Russian aluminum giant Rusal, one of the few publicly traded Russian firms accessible to international investors, dropped by 7% on the Hong Kong Stock Exchange. Meanwhile, Central European currencies saw more measured reactions, with the Polish złoty and Czech koruna weakening slightly against the U.S. dollar compared to a week earlier.
The uncertainty surrounding U.S. support for Ukraine now leaves the European Union and the U.K. as Kyiv’s primary backers. This week’s EU summit, set to focus on expanding military expenditure, will test Europe’s willingness to step in and fill the gap left by Washington’s wavering commitment. Meanwhile, a high-profile meeting of European leaders over the weekend reaffirmed pledges to safeguard Ukraine’s security beyond the war. The British prime minister, Keir Starmer, signaled that Britain is prepared to commit ground troops to Ukraine once the fighting stops, alongside contingents from other European nations.
Two days before his fallout with Zelenskyy, President Donald Trump reignited global trade tensions by announcing his intention to impose a sweeping 25% tariff on imports from the European Union, covering “cars and all things.” The tariffs, set to take effect as early as April, mark a return to his aggressive protectionist stance and could severely impact EU economies, particularly Germany and France. Trump framed the move as retaliation against what he claimed was a long-standing economic conspiracy, stating that the EU was designed to “cheat” the U.S.
In response, the European Commission issued a sharp rebuke, warning that it would retaliate swiftly and decisively against any unjustified trade barriers, including tariffs. According to EU data, the bloc’s average tariff on U.S. goods stands at 0.9%, compared to an average 1.4% for U.S. tariffs on EU products. However, in the automotive sector, the balance shifts: the EU levies a 10% duty on American cars, while the U.S. imposes a mere 2.5% on European vehicles. The new tariffs threaten to upend this dynamic, hitting European automakers hard and exacerbating existing economic strains.
For Poland, the impact is expected to be relatively mild. Prime Minister Donald Tusk estimated that the tariffs would shave no more than 0.1% off Poland’s GDP, suggesting that the country’s exposure to direct trade fallout is limited compared to Germany or France. However, broader disruptions in the EU economy could still pose challenges for Poland’s export-driven sectors.
The fallout was immediately visible on stock exchanges. On Monday, shares of Ukrainian companies listed on the Warsaw Stock Exchange plummeted, with some falling by double digits. Coal Energy, a major player in the sector, initially tumbled more than 20% before recovering some of its losses.
The reaction extended beyond Ukraine-linked assets. Shares of the Russian aluminum giant Rusal, one of the few publicly traded Russian firms accessible to international investors, dropped by 7% on the Hong Kong Stock Exchange. Meanwhile, Central European currencies saw more measured reactions, with the Polish złoty and Czech koruna weakening slightly against the U.S. dollar compared to a week earlier.
The uncertainty surrounding U.S. support for Ukraine now leaves the European Union and the U.K. as Kyiv’s primary backers. This week’s EU summit, set to focus on expanding military expenditure, will test Europe’s willingness to step in and fill the gap left by Washington’s wavering commitment. Meanwhile, a high-profile meeting of European leaders over the weekend reaffirmed pledges to safeguard Ukraine’s security beyond the war. The British prime minister, Keir Starmer, signaled that Britain is prepared to commit ground troops to Ukraine once the fighting stops, alongside contingents from other European nations.
Trump escalates trade war with EU
Two days before his fallout with Zelenskyy, President Donald Trump reignited global trade tensions by announcing his intention to impose a sweeping 25% tariff on imports from the European Union, covering “cars and all things.” The tariffs, set to take effect as early as April, mark a return to his aggressive protectionist stance and could severely impact EU economies, particularly Germany and France. Trump framed the move as retaliation against what he claimed was a long-standing economic conspiracy, stating that the EU was designed to “cheat” the U.S.
In response, the European Commission issued a sharp rebuke, warning that it would retaliate swiftly and decisively against any unjustified trade barriers, including tariffs. According to EU data, the bloc’s average tariff on U.S. goods stands at 0.9%, compared to an average 1.4% for U.S. tariffs on EU products. However, in the automotive sector, the balance shifts: the EU levies a 10% duty on American cars, while the U.S. imposes a mere 2.5% on European vehicles. The new tariffs threaten to upend this dynamic, hitting European automakers hard and exacerbating existing economic strains.
For Poland, the impact is expected to be relatively mild. Prime Minister Donald Tusk estimated that the tariffs would shave no more than 0.1% off Poland’s GDP, suggesting that the country’s exposure to direct trade fallout is limited compared to Germany or France. However, broader disruptions in the EU economy could still pose challenges for Poland’s export-driven sectors.
Poland’s economic sentiment improves amid uncertainty
Despite geopolitical risks, consumer sentiment in Poland has markedly improved, according to a newly released survey by CBOS. In February, 31% of respondents rated the national economy positively, surpassing the 29% who viewed it negatively. This shift marks a significant rebound from January, when pessimists outnumbered optimists by a margin of 36% to 25%.
Optimism about the future is also on the rise. The proportion of Poles expecting economic improvement climbed from 21% in January to 24% in February, while those fearing deterioration dropped from 34% to 27%. The same trend applies to personal financial expectations: 20% of respondents now anticipate an improvement, up from 18% in January, while only 15% foresee worsening conditions, compared to 20% the previous month.
These figures suggest that Polish consumers, while aware of global uncertainties, are becoming more confident in their economic prospects, potentially fueling further domestic demand.
Warsaw Stock Exchange shines despite growing market volatility
After weeks of record-breaking highs, the Warsaw Stock Exchange has entered a more volatile phase. While the Warsaw Stock Index (WIG) surged 5.3% in February, setting all-time highs six times, the market has shown signs of cooling off in recent days.
Notably, 2025 marks the first time since 2017 that the WSE has started the year with two consecutive months of gains. January saw an exceptional 9.8% increase, and the combined 15% jump over two months represents the strongest start for the WIG index since 2000.
Among Poland’s top-performing stocks, mBank and Orlen have each soared more than 30% year-to-date, while most large-cap firms remain in positive territory. Only two companies in the WIG20 – Kruk (-3%) and Cyfrowy Polsat (-1%) – have posted losses.
The earlier rally was largely driven by investor optimism over a potential resolution to the Ukraine conflict. However, as prospects for peace dim, so too has stock market enthusiasm, leading to a more cautious outlook among investors.
Labor market shows first signs of weakness
Poland’s labor market, long a pillar of economic stability, is beginning to show cracks, according to the latest Labor Force Survey (LFS) by the Central St
atistical Office (GUS). For the first time in years, Poland’s laboor force participation rate has declined even among working-age individuals, slipping from 81.8% in Q4 2023 to 81.7% in Q4 2024. This seemingly minor drop reflects a troubling trend, with the number of people either working or actively seeking employment shrinking.
In absolute terms, the number of employed working-age individuals fell by 112,000 over the past year, while the number of unemployed dropped by 53,000. Meanwhile, the pool of economically inactive individuals – those neither working nor seeking work – remained virtually unchanged, underscoring the growing demographic challenge of Poland’s rapidly aging workforce.
At present, Poland has 776 non-working individuals per 1,000 employed people. This is a concerning uptick from 769 the previous year, highlighting the need for urgent measures to boost workforce participation.
Poland’s coal industry suffers heavy losses
Poland’s struggling coal sector continues to be a major financial drain, with state-owned mines posting a staggering 11 billion złoty (€2.4 billion) net loss in 2024, according to data from the Industrial Development Agency (ARP).
The industry’s core coal sales recorded a €1.3 billion loss, reflecting an inability to cover production costs as global coal prices slumped. The gap between sales revenue and total net losses is attributed to additional financial and administrative expenses, highlighting the sector’s deep inefficiencies.
Despite years of restructuring efforts, powerful mining unions have successfully resisted major cost-cutting measures, and political leaders remain hesitant to impose drastic reforms for fear of electoral backlash. This longstanding inertia continues to weigh heavily on Poland’s state finances, leaving the industry in desperate need of a long-term strategy for sustainability.
