CBA MACROECONOMIC FORECAST FOR THE THIRD QUARTER OF 2026

Prague, August 19, 2026 – The Czech Banking Association’s (CBA) Forecast Panel, comprising chief economists from leading Czech banks, continues to expect the Czech economy to grow by 2.0% this year and to accelerate to 2.3% in 2027. Overall growth remains virtually unchanged from the May forecast, but its structure has shifted: the outlook for household consumption, investment, and exports is more favorable, supported by stronger wages, lending activity, and more resilient foreign demand. However, part of this improvement is offset by the economy’s increased reliance on imports.

The forecast’s inflation and monetary policy narrative has changed more significantly. This year’s average inflation rate has been lowered to 2.0%, mainly due to favorable developments in food prices. However, according to the panel, this effect may not be permanent, particularly due to the prolonged conflict with Iran and the drought. This year’s outlook for core inflation has shifted closer to 3%, wage growth has been revised upward, and the risks for 2027 are largely inflationary. The panel’s median forecast therefore now expects the CNB’s key interest rate to remain at 3.75% following its June increase—both at the end of this year and next year. This is a quarter of a percentage point higher than in May, when we listed a higher CNB rate among the key risks.

Meanwhile, for nearly half of the panel, the risks for the end of this year are skewed toward higher interest rates. The forecast is weighed down in particular by the persistence of core inflation, uncertainty regarding fiscal policy, and prolonged tensions in the Strait of Hormuz. Below, we discuss the six main risks and uncertainties in the CBA Forecast.

According to the CBA Survey, Czech households will only slightly reduce their savings rate to 18–19% over the next year. It will thus continue to significantly exceed the pre-COVID level of 12%, primarily due to structural factors.

Jaromír Šindel, Chief Economist of the Czech Banking Association:

“The August forecast does not change the overall pace of economic growth, but it significantly alters its structure. Consumption, investment, lending activity, and wages are stronger, while this year’s overall inflation is being tempered mainly by favorable trends in food prices. However, this effect may not last. Core inflation, faster wage growth, and the risk of higher energy prices therefore call for caution on the part of the CNB. This is one reason why the panel revised its outlook to expect the CNB to keep the interest rate at 3.75% throughout the forecast horizon, with a risk of a shift toward 4%.“

Petr Dufek, Chief Economist at Creditas Bank:

“In addition to intensifying foreign competition in traditional sectors and the still only gradual recovery of European demand, the outlook for the Czech economy is increasingly being affected by rising energy prices. Following the previous sharp rise in fuel prices, higher natural gas prices—and consequently higher electricity prices—are now beginning to affect the economy. These cost pressures will not only affect corporate profitability and household budgets but will also gradually be reflected in inflation and the pace of economic growth.”

Six Key Risks and Uncertainties in the CBA Forecast

1) How long will the current low overall inflation last? – This year’s 2% inflation rate is a relatively firm outlook among panel members. However, this low level is significantly supported by favorable food price trends since last fall. Most panelists, however, expect food prices to turn upward around the fall, due in part to a weaker harvest in Europe and higher energy and fertilizer prices. The gradual pass-through of higher natural gas and electricity prices related to the conflict with Iran may also have an inflationary effect. Consequently, the range of inflation estimates for 2027 is considerably wider, and the risk is skewed more toward the upside.

2) Strong wages and core inflation may keep rates higher for longer – According to the panel,core inflation will remain near 3% this year, and the outlook for nominal wage growth has been raised to 7.1%. If productivity growth fails to keep pace with wage growth, stronger wage costs may continue to fuel domestic price pressures, particularly in services. Room for monetary policy easing thus remains limited. Fiscal policy is also contributing to the resilient growth in core inflation, as is the risk of higher goods prices due to higher energy and transportation costs. The panel’s median forecast therefore now expects the CNB rate to remain at 3.75% at the end of both this year and next year. The risk of higher rates is thus not primarily linked to oil prices, but rather predominantly to domestic wage and price developments. Consequently, no respondent expects the CNB rate to fall below this level this year, and just under half of the respondents actually anticipate a rate of 4%.

3) Risk of a weaker koruna – This reflects a possible asymmetric shortfall in market expectations regarding the development of CNB and ECB interest rates, as the market trajectory implies higher rates than our forecast anticipates, particularly for the CNB.

4) Stronger domestic demand does not automatically mean faster GDP growth – Household consumption, investment, and exports have all been revised upward for this year, but at the same time, imports are rising significantly. Part of the stronger domestic demand thus supports foreign production and does not translate into higher Czech GDP. Furthermore, uncertainty surrounding the outlook for 2027 is increasing—half of the panel expects growth of between 2.2% and 2.6% (with a median forecast of 2.3%), while the CNB, at 2.7%, is on the optimistic end of the panel’s range. Weaker European demand remains a risk, while investments, stronger lending activity, and a gradual decline in the exceptionally high household savings rate could have a positive effect.

5) Prolonged tensions in the Strait of Hormuz represent a significant external risk to the forecast— According to the May sensitivity analysis, a return of oil prices to $100 per barrel could reduce the Czech economy’s growth and increase inflation by more than half a percentage point over a two-year horizon. In such a scenario, the monetary policy response could result in a CNB rate of around 4%, or possibly as high as 4.25%, if we take into account the risk of a higher interest rate in the baseline scenario.

6) Fiscal policy remains a source of uncertainty for 2027 – The median forecast projects a general government deficit of around 3% of GDP in 2027, with half of the panel’s projections ranging between approximately 2.9% and 3.1% of GDP. Any further easing of fiscal policy could support domestic demand and growth, but at the same time would increase the risk of more persistent inflationary pressures and higher interest rates.

Adam Ruschka, economist at J&T Bank:

“Despite the extraordinary events of the first half of the year, the Czech economy has remained in solid shape. Consumer demand continues to be robust, which is reflected in rapid price growth, particularly in terms of core inflation and service prices. Although overall inflation does not show any alarming figures, fundamental price pressures in the economy remain noticeably elevated. Interest rates are therefore also likely to remain elevated.”

CBA Survey: When Will Czechs Start Saving Less? The survey results suggest that the exceptionally high savings rate among Czech households is not merely a temporary post-COVID phenomenon, and the panel does not expect it to return to previous levels even in the coming years.

While households set aside an average of 11.9% of their disposable income between 2005 and 2019, the average savings rate has been 19.6% since 2020, reaching the same level in 2025 and rising further to 20% in the first quarter of this year. For the end of 2027, the panel expects only a slight decline—the median estimate is 18.5%, with half of the responses ranging between 18% and 19%. This is consistent with the assessment of the nature of the current high savings rate: on a subjective scale ranging from 0 (a completely temporary phenomenon) to 100 (a completely structural phenomenon), the median was 75, and half of the responses fell between 70 and 90 points.

Panelists attribute the high savings rate to a combination of several factors. These include stronger income growth, including the impact of the abolition of the “super-gross” wage, a higher concentration of savings among higher-income households, which generally have a lower propensity to consume; attractive returns on savings; and the shift of some funds from traditional deposits to investments, including government bonds for households. Household caution following a series of economic shocks also plays a significant role, as do longer-term concerns related to high housing costs, retirement security, and the structure of the pension system.

Source: CBA Forecast, Czech Statistical Office

The CBA Macroeconomic Forecast in Numbers:

Source: CBA Forecast, Czech Statistical Office (CZSO), Czech National Bank (CNB), Labor Office, Macrobond. Note: Any discrepancies in the changes compared to the previous forecast are due to rounding.

A Stronger Domestic Economy Amid Unchanged Overall Growth

The Czech economy is expected to grow by 2.0% this year and accelerate to 2.3% in 2027. Although these figures remain essentially unchanged from the May forecast, the outlook for individual sources of growth is more favorable. Household consumption is expected to rise by 3.0% this year, which is 0.3 percentage points faster than in the May outlook. A significant driver is stronger real wage growth, which the forecast for this year raises by 1.5 percentage points to 5%. Continued strong lending activity, as well as a more accommodative fiscal policy, are also contributing to consumption growth. On the other hand, the results of the CBA survey suggest that the exceptionally high household savings rate will decline only gradually and will remain well above the pre-COVID average even at the end of 2027.

Investment activity is showing a more pronounced improvement, which is partially offset by a more subdued outlook for government consumption. Investment excluding inventory is expected to rise by 4.1% this year—0.6 percentage points more than projected in May—and by 2.9% in 2027. The stronger outlook is consistent withthe ongoing recovery in corporate lending and with investment trends to date. Exports from the Czech economy are projected to grow by 4.7% this year, which is 1.5 percentage points more than in May. At the same time, however, the forecast significantly raises the growth rate of imports to 6.1%. Higher import growth thus dampens part of the positive impact of stronger domestic demand and exports and prevents a stronger outlook for GDP growth. Quarter-over-quarter growth in the Czech economy is expected to accelerate to around 0.6% in the second half of the year, following 0.2% in the first quarter and approximately 0.4% in the second quarter. The panel also expects similar growth rates on average in 2027.

The external environment remains a relatively weak component of the outlook. The panel expects eurozone growth of only around 0.8% thisyearand 1.2% in2027. From this perspective, the main external risk remains the strength of the European recovery and, in particular, the ability of the Czech export sector to continue diversifying its markets beyond traditional European markets.

Food prices are dampening overall inflation, but core price pressures remain

A significant change in the August forecast is the reduction of the expected average consumer inflation for this year by half a percentage point to 2.0%, though core inflation is higher. By the end of the year, however, headline inflation is expected to hover around 2.8%, and in 2027 the panel anticipates an average year-over-year increase to 2.6%. The lower outlook for this year is primarily due to more favorable food price trends, which have been evident since last fall. Furthermore, the shift of the renewable energy surcharge from households to the state budget has been having an impact throughout this year. These factors are dampening overall inflation despite continuing strong domestic price pressures.

Stronger demand pressures are reflected mainly in core inflation. Core inflation is rising by one-tenth of a percentage point to 2.9% this year and is expected to reach 2.7% in 2027. Although imputed rent is expected to slow after strong growth in July, more significant disinflation is being held back by persistent tensions in the real estate market and higher prices for construction materials due to energy costs. In the services sector, higher wage costs continue to be reflected, as does stronger demand driven by purchasing power. Prices of goods, meanwhile, may face pressure from more expensive energy, higher import costs, and, potentially, the risk of a weaker koruna.

The question remains as to how long the positive trend in food prices will last. The forecast predicts a turnaround as early as the end of this year. At the same time, it will gradually become clear to what extent higher natural gas and electricity prices will be reflected in consumer prices if the conflict with Iran drags on. Their impact may not be felt solely through household energy bills. Higher energy costs may also trickle down through supply chains to the prices of food, industrial goods, and certain services over time.

This explains the greater uncertainty surrounding the inflation outlook for 2027. While the panel’s estimates for this year are very tightly clustered around 2%, for 2027 half of the forecasts range between 2.6% and 2.9%, with the upper estimate reaching 3.2%. The risk is thus shifting toward higher inflation.

Domestic price pressures are driven primarily by wage developments. The average nominal wage is expected to rise by 7.1% year-over-year this year, and the panel expects 5.8% growth for 2027. Including a downward revision for last year, the outlook for the average wage over the forecast horizon is approximately one percentage point stronger. Combined with lower overall inflation, this implies a real wage increase of approximately 5% this year and 3.1% in 2027. Stronger real incomes, including the effects of a more accommodative fiscal policy, are an important driver of household consumption. At the same time, however, rapid nominal wage growth is increasing firms’ costs and, particularly in the services sector, may thus contribute tothe prolonged persistence of elevated core inflation.

According to the forecast, the labor market will experience only a gradual easing. Average registered unemployment is expected to reach 4.9% this year and decline slightly to 4.8% in 2027. July’s registered unemployment rate —with a seasonally adjusted rate slightly above 5%—has not yet led to a significant slowdown in wage growth, even though it is already close to the inflation-neutral level. Lower corporate profitability should contribute to a moderation in wage growth; however, a more pronounced slowdown is being held back by the still-low voluntary unemployment rate, which reached 3.3% in June, as well as the expected acceleration in economic growth next year.

The current consensus forecast factors in the possible elimination of about half of the license fees. Under a full implementation scenario, this measure could reduce consumer price inflation by approximately 0.3 percentage points next year. However, part of this anti-inflationary effect could be offset by a fiscal stimulus of up to CZK 10 billion—slightly over 0.1% of GDP—which would have an inflationary impact, particularly through core inflation. Beyond the forecast horizon, the introduction of ETS2 remains another significant factor.

Higher inflation increases the risk of a CNB interest rate hike

The median forecast of the panel now expects the CNB’s key rate to remain at 3.75% at the end of both 2026 and 2027—in both cases a quarter of a percentage point higher than in May. The June interest rate hike to 3.75% came despite lower headline inflation and primarily reflected its structure, namely higher core inflation. This is driven by stronger growth in wages and unit labor costs, as well as stronger domestic demand. No respondent expects the rate to be below 3.75% by the end of 2026. However, part of the panel anticipates a rate of 4%. In 2027, the range of opinions widens to between 3.5% and 4%, but the median remains at 3.75%. The average 3M PRIBOR is expected to reach approximately 3.7% this year and rise to 3.9% in 2027. A prolonged conflict with Iran, with oil prices returning to higher levels, poses an additional risk of a higher CNB rate.

According to the forecast, the koruna should remain relatively strong and dampen imported inflationary pressures. The panel expects the average exchange rate to be around 24.3 CZK/EUR this year and 24.1 CZK/EUR in 2027, which is 10 and 20 haléřů stronger, respectively, than in the May forecast. Among other factors, the interest rate differential with the eurozone supports a stronger koruna. The panel continues to anticipate a single 25-basis-point increase in the ECB’s deposit rate to 2.50% at the end of 2026, followed by a gradual reduction to 2.38% during 2027. The higher outlook for Czech rates in our forecast, compared with the more modestly increased outlook for ECB rates, thus reflects a response to domestic demand-driven inflationary pressures.

Although this outlook also carries the risk of a weaker koruna, the risk to the koruna stems from the difference between our outlook and market expectations. While our outlook for the ECB is just under a quarter of a percentage point below market pricing, the market anticipates an even higher CNB interest rate, up to 4.25%. This asymmetric deviation from market expectations poses a risk of a weaker koruna.

Bank Loans and Deposits

The outlook for bank lending activity has been further upgraded for this year. Total client loans are expected to grow by 7.6%, which is 0.4 percentage points faster than projected in May, and by 6.3% in 2027. Households remain the main driver, with their loans expected to rise by 9.0% this year. This strong growth reflects continued activity in the mortgage market as well as growth in consumer loans to households. Loans to nonfinancial corporations are expected to accelerate to 6.4% this year, following 4.1% growth in 2025. This is in line with a stronger outlook for investment activity and the ongoing recovery in new loan origination. In 2027, growth is expected to slow slightly to 5.5%.

The forecast for growth in customer deposits remains unchanged at 5.7% this year and 5.0% in 2027. The difference between the growth rates of loans and deposits thus reflects the ongoing recovery in lending activity and a gradual shift in household behavior, as households are increasingly turning to investment products—including retail government bonds—in addition to traditional deposits.

Source: Czech Banking Association (calculations, seasonally adjusted), CNB

It maintains a solid outlook for the Czech economy, but does not mitigate regional disparities

Source: Macrobond, Consensus Economics, CNB, CBA Forecast

Source: Macrobond, Consensus Economics, CNB, CBA Forecast

The Outlook for the Czech Economy in Charts

Source: CBA Forecast, Czech Statistical Office, Czech National Bank, Labor Office, Macrobond