Poland recorded the best real GDP growth performance among OECD countries during the global downturn. As it entered the recession with excess-demand pressure, the economic crisis curbed the imbalances that had been growing since 2006 due to an insufficiently tight macro-policy mix. In the midst of the crisis, as a result of the rise in global risk aversion that hit Central and Eastern European countries hard, the fear of collapse of the mainly foreign-owned Polish financial system and of massive capital outflows triggered a sharp depreciation of the zloty, providing a powerful underpinning to the economy. However, foreign parent banks supported their Polish affiliates and outflows seem to have been contained. Swift monetary policy reaction, using both conventional and exceptional instruments, macro-prudential measures, a small fiscal package, absorption of EU funds, government involvement to defend the zloty and IMF support all helped to restore confidence. Nevertheless, Poland was not spared from a significant slowdown, which has left the fiscal position under great strain to meet the constitutional debt rule, especially as the underlying budget deficit had widened pro-cyclically before the crisis. Combined with the unstable exchange rate, Poland had to postpone moving ahead with the euro adoption process. The shorter-term macroeconomic challenges are to restore fiscal discipline through public-finance reforms covering pension, tax and public-sector efficiency, absorb unprecedented transfers from the European Union and avoid overheating pressure and serious imbalances down the road. Given the recovery prospects, the withdrawal of monetary stimulus should begin soon, to avoid the early re-appearance of demand pressure, if fiscal policy is not tightened significantly in the immediate future.