In February 2025, the Czech economy showed mixed signals: industrial production and foreign trade rebounded, construction slowed down, and looming US tariffs threaten future development.
Industrial Production: A Rebound That Calls for Caution
After four consecutive months of decline, industrial production showed signs of recovery, with a 1.5% year-on-year increase and a 1.7% rise compared to January.
However, the improvement is partially attributed to a statistical effect caused by the low base of comparison from the previous year, especially in the production and distribution of electricity, gas, and heat. According to analyst Vít Hradil of Investika, this data should be interpreted with caution, as it does not yet reflect a structural recovery in the broader industrial sector.
Employment in the sector decreased by 2% year-on-year, indicating continued pressure on the industrial labor market.
Construction Sector: Modest Growth but Signs of Stagnation
The construction sector recorded a 0.9% year-on-year growth in February, but a 0.6% monthly decline compared to January. This marks a slowdown following three months of expansion.
Growth was primarily driven by civil engineering projects (infrastructure and energy structures), reaching the highest volume since April 2022. In contrast, residential and non-residential building construction remained weak, hampered by outdated zoning plans, slow permitting processes, and a tight monetary policy that makes financing less accessible.
In February, 2,607 new housing units were started, while only 1,683 units were completed—a significant decline. Employment in construction grew slightly by 0.2%, with average gross wages rising by 4%.
Industry: Positive Signals, but Not Across the Board
Beyond energy production, some manufacturing sectors also showed positive performance. Food processing, mechanical engineering, and electrical equipment manufacturing contributed to the overall increase.
On the other hand, sectors such as computers, electronics, optics, and transportation equipment experienced declines, influenced by a high comparative base and the completion of major orders.
Despite the slight recovery, new industrial orders fell by 1.3% year-on-year, with domestic orders down by 3.1% and foreign orders by 0.3%.
Foreign Trade: Solid Surplus, but Warning Signs Emerge
Czech foreign trade delivered solid results in February, with a surplus of CZK 35.5 billion. Exports rose by 1.3%, largely driven by the automotive sector, while imports increased by 1.6%, led by electrical equipment.
Key positive contributors to the trade surplus included motor vehicles and electricity, while metal products and chemicals had a negative impact.
While these figures exceeded market expectations, medium-term forecasts remain cautious.
US Tariffs: The Uncertain Factor Ahead
Economists are warning that new US tariffs could significantly affect the Czech economy in the coming months, particularly starting in April.
Although the US accounts for only 3% of direct Czech exports, it is the third most important partner in terms of value-added exports, including intermediate goods routed through other EU countries.
Many Czech companies are deeply integrated into global supply chains, making them vulnerable to indirect effects of US trade barriers. According to David Marek, Chief Economist at Deloitte, the tariffs could impact both the trade balance and GDP growth. Analysts also fear potential EU countermeasures, which could escalate trade tensions further.
Conclusion: Fragile Growth in an Uncertain Global Context
February 2025 paints a complex picture of the Czech economy. There are encouraging signs in industry and foreign trade, cautious optimism in public construction, but also growing concerns over the global trade environment.
The coming months will be crucial to determine whether the current recovery can solidify or will be undermined by external factors such as US-EU trade tensions and fluctuating global demand.
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