CBA Monitor
CBA Monitor is an interactive and quick overview of information on the development of the economy and the banking sector in the Czech Republic, accompanied by comments from CBA experts.
Updates
Comment by Jaromír Šindel, Chief Economist of the CBA: January show stable economic sentiment, but industry continues to be plagued by weak demand with negative consequences for investment. On the other hand, consumer purchasing plans remain full of optimism, also thanks to both lower price expectations, which are dampened by industry but not services, and better expectations on the labour market, where the service sector, which is lacking more workers, is making a positive contribution. Thus, it looks like continued solid economic growth this year with noticeably lower headline inflation. This combination is likely to shift the discussion at the CNB from rate stability or growth to rate stability or a possible decline, which is, however, not certain given the ongoing "services inflation" and the change in fiscal policy settings.
Average mortgage rate rises to 4.49%
Comment by Jaromír Šindel, Chief Economist of the CBA: The November data confirm an acceleration in industrial activity, driven by the automotive industry and the recovery of energy-intensive sectors, which pushed annual industrial growth closer to 6%, the highest this year. However, further improvement may be hampered by the December decline in industrial sentiment and export expectations. Construction remains weak, and its high 7% y/y growth reflects the past rather than the current reality of limited public investment and weak building permits issued. The labour market has not yet cooled significantly despite a higher 3.3% selection unemployment rate, confirming continued solid wage growth of around 6% in industry. Quarter-on-quarter GDP growth will thus be underpinned by industrial production in Q4, probably also retail, but construction and the foreign trade surplus will rather take a bite out of it.
December inflation in the Czech Republic remained at 2.1% year-on-year and was lower than expected by the Czech National Bank and the market. Developments in food and energy prices helped keep headline inflation low, while core inflation is likely to have rebounded to 2.8% after a slowdown in November. However, both figures still missed the CNB's outlook, and this is likely to be repeated this year. This should dampen the upside risk to the central bank's interest rate, but it will remain impatient in waiting to see how fiscal policy affects the economy and inflation through 2027.
Commentary by Miroslav Zámečník, Chief Advisor of the Czech Banking Association
Comment by Jaromír Šindel, Chief Economist of the CBA: Even the third quarter of 2025 did not bring a significant recovery in household disposable income. Despite this, the household savings rate has been abnormally high for almost six years. In Q3, it was 18.4%. Weaker quarter-on-quarter growth in disposable income has not kept pace with house prices for six quarters in a row. On a year-over-year basis, we are comparing 3.4% growth in disposable income vs. a 10.8% increase in home purchase prices including land (HPI).
Comment by Jaromír Šindel, Chief Economist of the CBA: The deterioration in economic sentiment in December does not yet represent a turning point for the outlook for the Czech economic recovery, which anticipates a deterioration in dynamics at the end of the year 2025. Household consumption plans remain resilient, while industry and the labour market are sending rather cautious signals, which poses a risk to the expected recovery in investment activity and the early stabilisation of rising registered unemployment. The outlook for lower administered energy prices supports falling price expectations, but persistent pressures in construction and services continue to dampen disinflationary optimism, sending a neutral rather than dovish message to the central bank.
Last CBA forecast
The CBA forecast is produced each quarter as a consensus forecast of selected domestic banks. A basic summary of the current CBA forecast in several figures and comments is outlined below, detailed information can be found in the
„CBA Forecast“ section.
GDP
0
% yoy
year 2025 | 2026
The domestic economy is expected to slow quarter-on-quarter growth to 0.4% in late 2025, after an average gain of 0.6% so far. For 2026, we expect it to add 0.62% on average quarter-on-quarter and thus actually grow by about 2.5% during the year. In 2024, Czech GDP will have grown by 0.5% quarter-on-quarter on average.
Unemployment
0
%
year 2025 | 2026
The registered unemployment rate had already climbed to 4.7% in October 2025 on a seasonally adjusted basis. But the continued solid momentum of the economy should stabilise unemployment in 2026 and continue to fall slightly in 2027, but remain above this year's average.
Average wages
0
%
year 2025 | 2026
Growth in average nominal wages is expected to slow to 5.6% year-on-year in 2026, after a probably surprising 7.2% increase in 2025, which repeated the same growth of the previous year. With little change in price dynamics, we expect stronger real wage growth: 3.3% in 2026 after a 4.6% improvement in 2025.
Inflation
0
% yoy
year 2025 | 2026
Stronger wage growth is reflected in a slightly higher outlook for core inflation at 2.5% next year, partly offset by the stronger koruna and the expected unchanged central bank interest rate. However, headline consumer inflation is expected to slow to an unchanged 2.2% yoy next year from 2.5% this year, and we expect it to accelerate slightly to 2.3% in 2027.
CNB 2-week repo rate
0
%
end of 2025
However, stronger wage growth together with slightly higher core inflation dynamics are reflected in the outlook for the CNB's stable interest rate at 3.50%. And it is expected to remain at half its 2022-2023 peak level during 2027.
The Crown
0
CZK/€
end of 2025
The stronger koruna in the forecast reflects a combination of the better performance of the Czech economy, the current level of the koruna exchange rate and the weaker US dollar. The outlook for the interest rate differential remains broadly unchanged.
Jaromír Šindel
Chief Economist CBA
Jaromír Šindel is the Chief Economist of the Czech Banking Association, where he uses his extensive experience in the field of macroeconomic analysis and forecasting. Prior to that, he worked for more than 17 years as the Chief Economist at Citibank. In 1999 - 2004, he received a master’s degree from the University of Economics Prague with a major in economic policy and continued to focus on this field during his doctoral studies, which he completed in 2011.
During his time at Citibank (2007-2024), he worked mainly on macroeconomic analysis with a focus on economic trends in the Czech Republic, Slovakia and Slovenia. He prepared forecasts of economic developments and economic policy, including the impact on financial markets. Related to this, he also monitored global economic and political trends and their impact on the local economic situation.