Published:25.04.2024
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Overview of the Czech Republic’s economic activity

Economic activity slowed down notably in 2023 but a rebound is expected in 2024, driven by a recovery in domestic demand.

In 2023 real GDP growth is estimated to have declined to -0.4 percent, mainly reflecting a decline in household consumption amidst a significant fall in real wages, deteriorating consumer sentiment, and heightened uncertainty. Growth is projected to increase to about 1.2 percent in 2024, mainly driven by consumption and fixed investment, as inflation declines, and real wages recover. Inflation is projected to meet the Czech National Bank’s target by early 2025 (International Monetary Fund January 2024).

Economic growth is set to be supported by the high saving rate of households over the past three years, the projected easing of inflation and rising real wages as well as by further relaxation of financing conditions. However, recent consumer and business confidence indicators are still below historical average, indicating an only gradual return to a higher growth rate of private demand.

The recovery of domestic demand, the easing of financing conditions and an acceleration of RRF implementation should support a pick-up in investment growth towards the end of 2024 and in 2025 (official web of the European Union). <br/> According to the recently released “Economic Freedom of the World Index” by the Canadian Fraser Institute, the Czech Republic has secured the seventeenth position among 165 surveyed countries in terms of economic freedom. Notably, the country has not only advanced in the absolute ranking of economic freedom but has also improved its relative ranking, rising to the 22nd spot compared to last year’s revised ranking (The Prague Monitor). 

Sources: 

International Monetary Fund

The official web of The European Union

The Prague Monitor