According to the European Commission’s latest economic forecast, Czechia is expected to experience a moderate recovery, with real GDP growth projected at 2.4% in 2025, easing to 1.9% in 2026, and rebounding to 2.4% in 2027. This growth will be primarily driven by private consumption, supported by rising real wages and a gradual decline in household saving rates.

However, external headwinds remain. Higher tariffs and slower growth among key trading partners will weigh on exports in 2025 and 2026, while imports are expected to outpace exports as domestic demand strengthens, leading to a negative contribution from net exports in 2026.

Inflation and Prices

Headline inflation is forecast to fall to 2.3% in 2025, driven by easing energy prices and slower services inflation, despite a temporary uptick in food prices. Inflation will decline further to 2.1% in 2026, before edging up to 2.4% in 2027. Core inflation (excluding energy and food) will remain above headline inflation in 2025 (3.0%) and 2026 (2.7%), before dropping slightly below it in 2027 (2.2%).

Energy prices will continue to exert downward pressure in 2025–2026, but the introduction of ETS2 could push energy inflation higher in 2027.

Labour Market

Czechia will maintain one of the lowest unemployment rates in the EU, rising only gradually from 2.7% in 2025 to 3.0% in 2026 and 3.1% in 2027. Wage growth will stay above inflation throughout the forecast horizon, though it will slow from 5.9% in 2025 to 4.8% in 2027. Structural shifts will continue, with more employment in services and higher female participation, while manufacturing jobs decline.

Public Finances

Despite fiscal consolidation measures and pension reforms, the general government balance will remain in deficit, narrowing to -1.8% of GDP in 2025, then widening to -2.0% in 2026 and -2.2% in 2027. Public debt will rise moderately from 43.4% of GDP in 2025 to 45.1% in 2027, staying well below the EU average.

Public investment will remain strong in 2025–2026, partly due to higher defence spending and EU fund absorption, before easing in 2027.

External Balance

The current account surplus is expected to hover around 2.2–2.3% of GDP throughout the forecast period, supported by resilient services exports and fiscal expansion in trading partners.

Source:

European Commission, https://economy-finance.ec.europa.eu/economic-surveillance-eu-member-states/country-pages/czechia/economic-forecast-czechia_en