Czech Republic Economic Outlook
Central Europe’s industrial powerhouse:
The Czech Republic has one of the most advanced economies in Central and Eastern Europe, with a GDP of around $350 billion. The country boasts a strong industrial base, a skilled workforce, and a favorable business environment. It is one of the EU’s most manufacturing-intensive economies, with automotive production playing a crucial role. Economic growth has been solid in recent years, although high inflation and weak external demand slowed activity in 2023.
Automotive and export-driven economy:The Czech Republic is a key European hub for automobile production, home to major manufacturers like Škoda Auto (owned by Volkswagen) and numerous auto parts suppliers. The country is also a significant exporter of machinery, electronics, and pharmaceuticals. Germany is its largest trading partner, making the Czech economy highly sensitive to fluctuations in German industrial output.
Challenges:Inflation surged above 15% in 2022, eroding real wages and dampening consumer spending, though it moderated in 2023. The Czech Republic also faces long-term labor shortages due to a low unemployment rate and demographic challenges. Additionally, while the country has strong fiscal discipline, it has delayed euro adoption, preferring to maintain control over its monetary policy.
Czech Republic’s economic forecasts:The Czech economy is expected to regain momentum as inflation stabilizes and external demand recovers. Continued investment in automation, energy transition, and infrastructure will support industrial competitiveness. However, exposure to external shocks—particularly from Germany and the EU—poses a risk. The country’s ability to maintain strong economic fundamentals while addressing labor shortages and energy security concerns will determine its long-term trajectory.
Czech Republic's Macroeconomic Analysis:
Nominal GDP of USD 343 billion in 2023.
GDP per capita of USD 31,626 compared to the global average of USD 10,589.
Average real GDP growth of 2.2% over the last decade.
Sector Analysis
In 2022, services accounted for 60% of overall GDP, manufacturing 21%, other industrial activity 17%, and agriculture 2%. Looking at GDP by expenditure, private consumption accounted for 46% of GDP in 2023, government consumption 20%, fixed investment 29%, and net exports 5%.International trade
In 2021, manufactured products made up 90% of total merchandise exports, mineral fuels 2%, food 5%, ores and metals 1% and agricultural raw materials 1%, with other categories accounting for 1% of the total. In the same period, manufactured products made up 83% of total merchandise imports, mineral fuels 6%, food 6%, ores and metals 3% and agricultural raw materials 1%, with other goods accounting for 1% of the total. Total exports were worth USD 197 billion in 2024, while total imports were USD 179 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 2.2% in the decade to 2024. To read more about GDP growth in Czech Republic, go to our dedicated page.
Fiscal policy
Czech Republic's fiscal deficit averaged 1.7% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 3.2% in the decade to 2024. For more information on Czech Republic's unemployment click here.
Inflation
Inflation averaged 4.0% in the decade to 2024. Go to our Czech Republic inflation page for extra insight.
Monetary Policy
Czech Republic's monetary policy rate ended 2024 at 4.00%, up from 0.05% a decade earlier. See our Czech Republic monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the koruna weakened by 5.8% vs the U.S. dollar. For more info on the koruna, click here.
Economic situation in Czech Republic
A second release upwardly revised the preliminary estimate for economic growth in Q4: GDP rose by 0.7% in seasonally adjusted quarter-on-quarter terms, outpacing Q3’s 0.6% expansion and marking the joint-strongest result since Q4 2021. Private consumption helmed the sequential upturn, outweighing deteriorations in all other expenditure subcomponents. Turning to Q1 2025, the economy is expected to be expanding at a similarly robust pace. Past interest rate cuts plus softer average inflation in January–February and a lower unemployment rate in January are likely supporting domestic demand. In other news, as tensions rise in Eastern Europe, Prime Minister Petr Fiala pledged in March to lift defense spending to 3.0% of GDP by 2030 from around 2% in 2024. The increase will be gradual, starting from 2026, and bodes well for public expenditure, investment and national security.Czech Republic Economic Forecasts
Projections out to 2034.56 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 40 expert analysts.
Want to get insight on the economic outlook for Czech Republic in the coming years? FocusEconomics collects projections out to 2034 on 56 economic indicators for Czech Republic from a panel of 40 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Czech Republic economy. To download a sample report on the Czech Republic's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.