Czech Republic Investment

Economic growth accelerates in the second quarter of 2026

Q2 sequential GDP growth flash reading confirmed: The Czech Republic's GDP increased 0.4% on a seasonally adjusted quarter-on-quarter basis in Q2, following 0.2% growth in the previous quarter, matching market expectations and the preliminary figure. On a seasonally adjusted year-on-year basis, economic output expanded 1.9% in Q2, following a 2.2% expansion in the previous quarter. The annual print was revised down slightly from 2.0% in the flash release.

Private spending and exports drive uptick: Relative to the prior period's data, readings in Q2 improved for private consumption (+0.5% on a seasonally adjusted quarter-on-quarter basis vs +0.3% in Q1) and exports of goods and services (+0.9% vs +0.6% in Q1). In contrast, readings worsened for fixed investment (+1.5% vs +2.0% in Q1) and imports of goods and services (0.0% vs +1.9% in Q1). Finally, the variation in government consumption was the same as in the prior quarter (+0.1% in Q2 and Q1). Household spending likely strengthened as inflation matched the Central Bank’s 2.0% target and consumer confidence remained optimistic, despite easing from Q1. The limited pass-through of the Iran-related energy shock helped to contain inflation. Stronger German demand will have provided support to Czech exports, while persistent geopolitical uncertainty will have capped fixed investment growth.

Economy to strengthen in Q3: Our panelists expect sequential GDP growth to strengthen from Q2 in Q3, before broadly stabilizing through end-2027. Private spending should drive momentum ahead amid government fiscal support, a still-tight labor market and resilient consumer confidence. Still, geopolitical uncertainty, weak external demand and climate-related supply disruptions will likely weigh on fixed investment and industrial output ahead.

Panelist insight: EIU analysts commented: “The decent growth outturn in the second quarter will support the hawkish attitude of the Czech National Bank (the central bank), and we expect monetary policy stability in the medium term. The Czech economy’s resilience to global economic headwinds suggests that both domestic demand and external demand from Germany will play crucial roles in supporting growth in the coming years.”

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