Czech Republic: Economic growth eases in the fourth quarter of 2025
Q4 sequential GDP growth above five-year trend: The Czech Republic’s GDP expanded 0.6% in seasonally adjusted quarter-on-quarter terms in Q4, following a 0.8% expansion in the prior quarter. The deceleration in sequential GDP growth was spearheaded by weaker net exports and a decrease in inventories. Still, Q4’s print marginally overshot both market expectations and the prior five-year average.
On a seasonally adjusted year-on-year basis, economic output expanded 2.6% in Q4, following a 2.8% expansion in the prior quarter.
Accordingly, in 2025 as a whole, the economy expanded 2.6%, accelerating from 2024’s 1.1% growth and marking a three-year high.
Growth remains broad-based: Relative to the prior period’s data, the reading for exports of goods and services worsened in Q4 (+0.8% on a seasonally adjusted quarter-on-quarter basis vs +0.9% in Q3). In contrast, readings picked up for private consumption (+1.3% vs +0.3% in Q3), government consumption (+1.0% vs +0.7% in Q3), fixed investment (+1.7% vs +1.0% in Q3) and imports of goods and services (+0.6% vs +0.2% in Q3). In particular, private spending was boosted by rising real wages and lower inflation.
GDP growth seen stabilizing ahead: Our Consensus is for full-year GDP growth to hover close to 2025’s rate in 2026. Private and public spending growth is seen largely unchanged, the former supported by near-target inflation, lower taxes and increased welfare transfers. Additionally, fixed investment should gain steam, aided by disbursements from the EU’s post-pandemic Recovery and Resilience Fund, which is set to expire this year. Less positively, slower export growth is seen capping overall momentum. The impact of the ongoing Middle East conflict on energy prices remains key to track.
Panelist insight: On the outlook, analysts at Erste Bank commented:
“The Czech economy continues its favorable development, which is roughly stable. Last year, GDP growth reached 2.6%, and we expect similar values for this year and next. Household consumption remains the main driver of growth. Household demand is primarily influenced by a strong labor market, which should not change significantly.”