Czech Republic flag Czech Republic: Economic and Political Overview

The economic context of the Czech Republic

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Covid-19 weighed on the fundamentals of the Czech economy that had supported growth: domestic demand, tax, revenues and exports. In 2021, the pace of growth was not sufficient to return fully to the pre-pandemic level, which was only achieved by mid-2022. Over the year, the country’s GDP recorded a moderate growth of 1.9% driven by an uptick in investment activity, with the spillover effects of Russia’s invasion of Ukraine and high energy prices hampering growth. Private consumption is expected to contract in 2023, reflecting a decline in households’ purchasing power. Due to weaker foreign demand and the tightening of financial conditions, the IMF forecasts a GDP growth of 1.5% this year, followed by a better performance in 2024 (+3.9%).

The Czech economy had already shown signs of slowing before the outbreak of Covid-19 amid lower growth in Germany and trade uncertainties, as its industry-based economy, which relies on imports, was strongly affected by supply chain disruptions and high energy prices. In 2022, government revenues increased due to high inflation; however, expenditures were also on the rise owing to the automatic indexation of pensions with inflation and the support packages to mitigate the impact of energy prices (with total net costs estimated at 1% of GDP by the EU Commission), hence the total government budget deficit was estimated at 4.3% of GDP by the IMF. The budget deficit is forecast to decrease to 3.4% of GDP in 2023 and 2.9% in 2024 as revenues will be boosted by a windfall tax on the largest energy companies and banks as well as a levy on revenues above a certain price ceiling for electricity producers. The public debt-to-GDP ratio is still low compared to other EU Member States: it was estimated at 41.5% in 2022 and should remain stable over the forecast horizon. For 2022 as a whole, headline inflation was estimated at 16.3%, reflecting the higher cost of domestic production and imports. The IMF expects the cap on retail gas prices to mitigate inflation in 2023 (8.6%) before it returns to levels closer to the Central Bank’s target in 2024 (2.5%).

Czechia has a tight labour market and a low share of temporary contracts, with one of the lowest ratios of unemployment in Europe, at 2.5% in 2022 (from 2.8% one year earlier). Market conditions may get tighter as Ukrainian refugees join the labour market, but the unemployment rate is expected to remain low this year and the next (2.3% - IMF). The IMF estimated the country’s GDP per capita (PPP) at USD 48,919 in 2022, slightly below the EU average, although nominal wage growth lagged behind inflation last year, reducing real disposable income.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 290.53335.24359.11381.02402.59
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 26,83230,47532,39134,46736,530
General Government Balance (in % of GDP) -3.8-3.8-2.2-2.0-1.9
General Government Gross Debt (in % of GDP) 44.245.444.444.143.8
Inflation Rate (%) n/a10.
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) -17.781.676.136.977.53
Current Account (in % of GDP) -

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

The agricultural sector went through a serious crisis in the 1990s and remains highly subsidised. Nowadays, it accounts for 1.8% of the country's GDP and employed 3% of the labour force (World Bank, latest data available). The country has an agricultural area of 3.5 million ha and a forest area of 2.65 million ha (FAO). The main agricultural products are sugar beet, potatoes, wheat, barley and poultry. Organic farming in the country is characterized mainly by the extensive breeding of cattle, goats and sheep in less favourable agricultural areas. In 2022, the EU Commission approved a EUR 20.2 million scheme to support Czech agricultural producers in the context of Russia's invasion of Ukraine, which consists mainly of a reduction of the principal of operating loans granted to primary agricultural producers. According to the latest figures from the Czech Statistical Office, cereals production increased by 26.8% year-on-year in 2022 reaching CZK 58.1 billion, while the net value output rose by 5.6%.

Industry accounts for 30.3% of GDP and employs 37% of the labour force. Growth in performance has been accompanied by an increase in the productivity of the labour force. The automotive sector is by far the largest industry, with companies like Skoda (owned by Volkswagen). Since 2005, foreign investors such as Toyota and PSA have also started producing cars in the Czech Republic. The Czech automotive industry now employs more than 150,000 people and accounts for more than 20% of both Czech manufacturing output and Czech exports. The Czech electronics and electrical engineering sector accounts for more than 14% of total manufacturing output, which makes it the second-largest sector in the economy (over 17,000 companies employ more than 180,000 workers in the sector). Overall, the manufacturing industry contributes 21% of GDP.

Services account for 58.8% of GDP and employ nearly 60% of the active population. The tourism sector recorded a pace of sustained growth in recent years, which was partially hampered by the COVID-19 pandemic. Nevertheless, the sector started its recovery in 2022: according to data from the Czech Statistical Office, the country hosted 2.8 million visitors in the first quarter of the year, a sharp rise compared with the mere 280,000 visitors recorded in all of the previous year. In 2021, there were 46 licensed banks operating in the Czech Republic: four large banks, five medium-sized banks, nine small banks, 23 branches of foreign banks and five building societies. 37 entities were controlled by foreign owners, of which 12 were banks and 25 were branches. At the end of the year, the total value of the banking sector's assets increased by about 7%, to EUR 340 billion, representing about 141% of the country’s GDP.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.5 36.9 60.6
Value Added (in % of GDP) 2.1 30.7 57.9
Value Added (Annual % Change) -2.4 1.6 3.1

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.


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Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024


Country Risk

See the country risk analysis provided by Coface.

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Sources of General Economic Information

Ministry of Agriculture
Ministry of Foreign Affairs
Ministry of Industry and Trade
Ministry of Finance
Statistical Office
Czech Statistical Office (CZSO)
Central Bank
Czech National Bank  
Stock Exchange
Prague Stock Exchange
Czech Capital Market Association
Economic Portals, Czech business web portal
Financni Noviny, News in Czech

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Latest Update: December 2023