In a recent update, the European Commission (EC) has adjusted its economic outlook for the Czech Republic, painting a picture of modest growth amidst ongoing challenges. The EC’s latest forecast reveals a slight downturn in expectations for both the current and upcoming year.
For 2024, the EC now projects a 1% increase in the Czech Republic’s Gross Domestic Product (GDP), a marginal decrease from the 1.2% growth predicted earlier this spring. Looking ahead to 2025, the forecast has been trimmed to 2.4%, down from the previous estimate of 2.8%.
Despite these adjustments, there’s a silver lining on the horizon. The EC anticipates a more robust growth of 2.7% by 2026, with household spending expected to be the primary driver of this economic expansion. This uptick is likely to be fueled by rising real wages as inflation continues to ease.
On the inflation front, the EC foresees a gradual decline. Projections indicate inflation rates of 2.7% for 2024, dropping to 2.4% in 2025, and finally reaching the Czech National Bank’s target of 2% by 2026.
These forecasts align closely with those of the International Monetary Fund (IMF), which last month predicted a 1.1% growth for the Czech economy in 2024, followed by an acceleration to 2.3% in 2025.
The EC’s revised outlook for the Czech Republic is part of a broader European trend. The Commission has also lowered its growth expectations for the entire European Union, projecting a 0.9% increase for 2024 and 1.5% for 2025. Despite these adjustments, the EC remains optimistic, noting that the EU is emerging from a period of stagnation and entering a phase of modest growth, accompanied by declining inflation.