While public attention has often focused on disagreements over government reforms, the actual results are clear. The Czech economy is recovering well and moving ahead of its neighbors.

New data from Eurostat shows that Czechia has the lowest public budget deficit in the region — just 2.2% of GDP. Germany comes next with 2.8%. At the same time, Czech public investment is at a record 4.7%, higher than Germany (2.9%) and just behind Poland (4.9%).

This strong position is the result of the government’s decision not to overspend during the COVID and energy crises. Unlike Slovakia, Hungary, and Poland, which offered big subsidies and price caps, Czechia took a more careful path. While this was criticized at the time, it has led to better long-term results.

Inflation and Debt Under Control

Czechia also now has the lowest inflation and lowest public debt in the region. Inflation fell sharply in April due to several short-term reasons, but overall, prices are more stable here than in neighboring countries, where high government spending is still pushing inflation up.

Real wages in Czechia are expected to grow by 4.3% this year, and this trend should continue. That’s much better than in Slovakia, where wages will rise only around 1%. The Slovak government tried to cut its large deficit, but this slowed down wage growth and raised inflation.

Germany, Austria, and Poland are also expecting weak wage growth of around 1–1.5%. Hungary may do better with 3%, but only because of continued high government spending, which is not sustainable.

Czechia Is Moving Ahead

Germany is still trying to catch up after years of underinvestment. While its government has announced big plans, they haven’t been put into action yet.

Meanwhile, Czechia is now in the best economic shape in the region. If the current policies continue — focusing on careful spending, smart reforms, and support for long-term growth — the country’s living standards will keep improving. 

Prepared by the team of CzechTrade – Foreign office in Cairo
Source: Prague Morning, https://praguemorning.cz/czechia-macroeconomic-stability/