17:43 21 August 2025
PIE: additional military spending does not always contribute to GDP growth
The Polish Economic Institute (PIE) warns that extra defense spending does not always boost GDP. Shifting funds from other sectors, reliance on imports, and a tight labor market may hinder growth. For the EU, maximizing intra-community purchases is crucial, while fragmented national demand reduces efficiency. PIE recommends joint procurement and coordinated supply chains to optimize spending. Defense outlays support growth only if designed as investment programs, focusing on modernization, infrastructure, workforce skills, and dual-use R&D with civilian benefits.
Such projects can raise productivity beyond defense. According to the ECB, defense expenditures could add 0.1 pp annually to eurozone growth in 2026–2027, with limited inflationary impact. In an optimistic scenario, growth could rise 0.4–0.6 pp by 2027 with investment-driven, debt-financed programs.
