Skyline of Prague, Czech Republic

Czech Republic Economic Forecast

Czech Republic Economic Outlook

The economy contracted year on year in Q2, weighed down by another decline in consumer spending and shrinking inventories. Data for Q3 hints at protracted economic weakness. In July-August, the manufacturing PMI was stuck in contractionary terrain, while businesses and consumers remained deeply pessimistic. More positively, inflation continued to decline in July, although it came in at almost 9.0%. In politics, in late August, the ruling center-right coalition reached an agreement on changes to its austerity package, as it seeks to reduce the budget deficit. At around the same time, Fitch Ratings affirmed the country’s AA- credit rating while keeping a negative outlook due to its weak public finances. Also in late August, the European Commission approved a EUR 800 million scheme to support businesses in the face of increased energy prices.

Czech Republic Inflation

Inflation fell to 8.8% in July from 9.7% in June—the lowest reading since December 2021. The drop was due to a broad-based moderation in price increases. Inflation should continue to decline for the remainder of the year, although protracted pass-through effects will keep it above the Central Bank’s 1.0–3.0% target range. Oil and gas prices are key factors to watch.

This chart displays Economic Growth (GDP, annual variation in %) for Czech Republic from 2013 to 2022.

Czech Republic Economic Data

2018 2019 2020 2021 2022
Population (million) 10.6 10.7 10.7 10.7 10.5
GDP (USD bn) 249 253 246 282 290
GDP per capita (USD) 23,453 23,711 22,999 26,320 27,615
GDP (EUR bn) 211 226 216 238 276
GDP per capita (EUR) 19,878 21,184 20,174 22,265 26,272
GDP (CZK bn) 5,411 5,791 5,709 6,109 6,786
Economic Growth (Nominal GDP, ann. var. %) 5.9 7.0 -1.4 7.0 11.1
Economic Growth (GDP, ann. var. %) 3.2 3.0 -5.5 3.5 2.4
Domestic Demand (ann. var. %) 4.9 3.2 -5.4 8.4 1.5
Private Consumption (ann. var. %) 3.3 2.6 -7.4 4.1 -0.8
Government Consumption (ann. var. %) 3.9 2.5 4.2 1.4 0.6
Fixed Investment (ann. var. %) 10.0 5.8 -6.0 0.7 3.0
Exports (G&S, ann. var. %) 3.7 1.4 -8.1 6.8 7.2
Imports (G&S, ann. var. %) 5.8 1.4 -8.2 13.2 6.3
Industrial Production (ann. var. %) 3.0 -0.3 -7.2 6.6 2.5
Retail Sales (ann. var. %) 4.9 4.8 -0.7 4.3 -3.7
Disposable Income (ann. var. %) 3.7 3.3 -0.6 4.3 -3.6
Wages (ann. var. %) 8.2 7.9 4.6 5.8 5.3
Unemployment (% of active population, aop) 2.3 2.0 2.6 2.8 2.4
Fiscal Balance (% of GDP) 0.9 0.3 -5.8 -5.1 -3.6
Public Debt (% of GDP) 32.1 30.0 37.7 42.0 44.2
Money (ann. var. of M2 %) 5.6 7.0 10.7 7.0 5.0
Inflation (CPI, ann. var. %, eop) 2.0 3.2 2.3 6.6 15.8
Inflation (CPI, ann. var. %, aop) 2.1 2.8 3.2 3.8 15.1
Inflation (HICP, ann. var. %, aop) 2.0 2.6 3.3 3.3 14.8
Inflation (PPI, ann. var. %, aop) 2.0 2.6 0.1 7.1 24.3
2-Week Repo Rate (%, eop) 1.75 2.00 0.25 3.75 7.00
3-Month PRIBOR (%, eop) 2.01 2.18 0.36 4.08 7.26
10-Year Bond Yield (%, eop) 1.85 1.63 1.28 2.73 5.02
Stock Market (ann. var. of PX-50 %) -8.5 13.1 -7.9 38.8 -15.7
Exchange Rate (CZK per USD, eop) 22.51 22.64 21.46 21.85 22.63
Exchange Rate (CZK per USD, aop) 21.74 22.93 23.21 21.69 23.37
Exchange Rate (CZK per EUR, eop) 25.74 25.41 26.26 24.85 24.15
Exchange Rate (CZK per EUR, aop) 25.66 25.67 26.46 25.64 24.56
Current Account Balance (EUR bn) 0.9 0.7 4.3 -6.6 -16.9
Current Account Balance (% of GDP) 0.4 0.3 2.0 -2.8 -6.1
Merchandise Trade Balance (EUR bn) 7.8 9.3 10.6 2.7 -4.0
Merchandise Exports (EUR bn) 136 139 128 149 175
Merchandise Imports (EUR bn) 128 130 117 146 179
Merchandise Exports (ann. var. %) 5.6 2.3 -8.2 16.0 17.8
Merchandise Imports (ann. var. %) 7.7 1.2 -9.7 24.2 22.7
Foreign Direct Investment (EUR bn) 9.6 9.0 7.7 8.0 9.2
International Reserves (EUR bn) 121 134 146 147 133
International Reserves (months of imports) 11.3 12.4 14.9 12.1 8.9
External Debt (EUR bn) 171 173 165 182 184
External Debt (% of GDP) 81.3 76.5 76.3 76.3 66.7

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