Gross domestic product
2.5
% yoy
ytd average GDP in 2025 (to Q4)
1.1
% yoy
Average GDP in 2024
Gross domestic product
(annual values, % yoy)
Comments
Slight economic slowdown in late 2025 and this year is poised to repeat last year's 2.5% growth
Comment by Jaromír Šindel, Chief Economist of the CBA: Economic growth slowed down at the end of last year, but still achieved solid 0.5% quarter-on-quarter GDP growth.The structure of growth has not changed significantly - consumption is dominant, which is probably not true of investment. This is in line with the latest sentiment data. A more positive sign is improving productivity. The outlook for this year is a repeat of last year's 2.5% growth, thanks to a better outlook for real wage growth and a change in fiscal policy. Conversely, weaker external demand, even given industrial sentiment, is likely to be a drag on stronger economic growth.
Strong GDP growth masks a key problem, namely continued weak investment and falling productivity while wage growth remains strong
Comment by Jaromír Šindel, Chief Economist of the CBA: The stronger quarter-on-quarter GDP growth of 0.8% in Q3 mainly reflected foreign trade, while the contribution of domestic demand was not as strong as in the previous quarter. Moreover, there has been a continuous decline in fixed investment excluding construction investment, undermining the future potential of the economy and keeping productivity growth low and fuelling inflationary growth in unit labour costs (see five key points below).
The economy delivered another surprise with productivity growth picking up in Q3.
Comment by Jaromír Šindel, Chief Economist of the CBA: The return to stronger economic growth of 0.7% quarter-on-quarter in Q3 was a surprise, confirming the indications of stronger confidence in September. At the same time, stagnant employment added a welcome return to stronger productivity, which may partially dampen the hawkish impulse of stronger GDP for the CNB. The CNB will most likely leave interest rates unchanged at 3.5%, not only at the November meeting, but GDP details may set a more distinct tone to its communication later in November.
September CNB interest rate decision: hawkish calm before the storm?
Commentary by Jaromír Šindel, Chief Economist of the CBA: Higher-than-expected wage growth will be the main, but not the only, reason for keeping the interest rate at 3.5% at the CNB's September meeting and for the intensification of the hawkish tone in the communication. The latter may indeed indicate a further upward movement in the interest rate, but rather in an unspecified distant horizon. A stronger koruna or tighter monetary policy through the longer end of the yield curve is unlikely to lead the CNB to a dovish mindset.
Weak July industrial and services recovery hinders continuation of solid GDP growth
Economic commentary by Jaromír Šindel, Chief Economist of the CBA: Although the economy breathed a half-percent growth in the second quarter, the July figures were rather disappointing and suggest a cooling. However, the Czech economy is generating upside risks to inflation, which limits the room for manoeuvre of the CNB, which is likely to stick to the CNB's 3.5% terminal interest rate thesis. August's registered unemployment confirmed a worse trend, which, however, is not confirmed by other data.
Slower GDP growth in Q2 likely due to weaker June
Economic commentary by Jaromir Šindel, Chief Economist of the CBA