Economic Growth Supported by Household Spending
Czechia’s economy is expected to slow down in 2026 after a solid performance in 2025. Real GDP grew by 2.6% in 2025, but growth is forecast to slow to 1.8% in 2026 before rising again to 2.4% in 2027. Household spending is expected to remain the main engine of growth, helped by higher real wages and a gradual fall in household saving rates. Although consumer confidence improved strongly after April 2025, higher energy prices and greater economic uncertainty in April 2026 are expected to affect spending and business activity. Investment is also forecast to support growth, thanks to stronger use of EU funds, a recovery in residential construction, and higher demand in several industrial sectors.
Trade and Labour Market Remain Resilient
Exports are expected to increase in both 2026 and 2027, supported by fiscal expansion and higher defence spending in some of Czechia’s main trading partners. However, higher energy costs, economic uncertainty and US tariffs are expected to slow export growth, especially in 2026. At the same time, strong domestic demand will likely increase imports, causing net exports to have a negative impact on growth in 2026 before making a small positive contribution in 2027. The labour market is expected to stay strong despite a gradual rise in unemployment, from 2.8% in 2025 to 3.2% in 2027. Employment continues to shift toward the services sector and higher female participation, while manufacturing employment keeps declining. Wage growth is forecast to remain above inflation, although it is expected to slow gradually over the next two years.
Inflation and Public Finances
Inflation is forecast to rise from 2.3% in 2025 to 2.7% in 2026 and 2.8% in 2027, mainly because of higher energy prices. Rising fuel and gas prices are expected to more than offset lower electricity prices, as the government takes over the cost of the renewable energy fee. Services inflation is expected to ease as wage growth slows. The fiscal outlook points to a larger government deficit, increasing from 2.1% of GDP in 2025 to 2.8% in 2026 and 2.9% in 2027, reflecting a more expansionary fiscal policy. Public debt is also expected to increase, from 44.3% of GDP in 2025 to 47.2% in 2027, while remaining low compared with the EU average.
Link: Economic forecast for Czechia – Economy and Finance – European Commission
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