The stronger-than-expected performance was driven by resilient exports and steady investment, partly buoyed by one-time stockpiling by firms anticipating higher trade barriers, especially from the U.S. and Germany.

Household consumption, while still positive, contributed less to growth than forecast—rising by 2.5% compared to the anticipated 3.3%. However, the Czech National Bank (CNB) sounded a note of caution, warning that the boost to exports and investment may be temporary. The central bank expects that tariff-related uncertainties, especially from U.S. policy, pose downside risks to full-year growth, which it now estimates at around 2.0%.

The Czech Republic is one of the UK’s key trading partners in Central Europe, especially in manufacturing and automotive supply chains. A slowdown in Czech exports or investment activity could ripple back through UK suppliers and subcontractors involved in these sectors.

Source: Reuters

Prepared by the CzechTrade United Kingdom and Ireland team.