The Finance Ministry has upgraded its outlook for this year’s economic growth. According to the latest prediction, the Czech Republic’s Gross Domestic Product (GDP) will increase by 2.1 percent this year. This represents a slight improvement from April’s forecast, which anticipated 2 percent growth. For next year, the economy is expected to grow by 2 percent.
The new economic prediction, presented Thursday by Finance Minister Zbyněk Stanjura, takes into account tariffs imposed by the United States on most imports from the European Union. These trade barriers will slow Czech growth dynamics by 0.3 percentage points this year and 0.4 percentage points next year. However, in 2026, the Czech economy could benefit from the German government’s stimulus package, potentially accelerating growth by 0.2 to 0.3 percentage points due to the interconnection between both economies.
The main drivers of economic growth both this year and next are expected to be household consumption and government spending. Household consumption is projected to increase by 3 percent this year and 2.9 percent next year, while government expenditures will grow by 1.9 percent this year and 1.4 percent next year. In 2026, renewed investment activity is expected to contribute to growth, with investments rising by 2.9 percent following this year’s stagnation.
Regarding wages, the forecast indicates a nominal increase of 6.6 percent this year, slowing to 5.4 percent next year. With inflation expected to remain stable at an average of 2.4 percent this year and 2.3 percent next year, this will translate to real wage growth.
“Current figures confirm the trend that the Czech economy is gradually returning to sustainable growth, which is the best foundation for its further development,” said Minister Stanjura. “This is thanks to both low and stable inflation, which should decrease further next year, and growing real wages by four percent, which are visibly reflected in higher household consumption.”
The Finance Ministry’s forecast aligns with predictions published Wednesday by the Czech Banking Association. However, the Czech National Bank, which released its forecast last week, was more optimistic, projecting GDP growth of 2.6 percent this year and higher inflation averaging 2.6 percent.