The Czech economy is showing signs of recovery, thanks to the strong performance of household consumption. Forecasts predict that foreign demand will also contribute to growth, pushing GDP towards around 3% in the coming years. Despite this, the labor market remains robust, with low unemployment rates expected to continue. Real wages are also expected to increase, further boosting internal demand.
Inflation has been a concern for the Czech economy lately, but it has remained within acceptable levels. However, there is an expectation of a temporary inflation hike towards the end of the year, potentially exceeding 3%. The CNB has been gradually cutting interest rates and is likely to continue with more cuts in increments of 25 points. However, uncertainty remains about how the CNB will address inflation spikes in the fourth quarter of 2024, which may slow down rate cuts.
The koruna has appreciated significantly but is expected to stabilize by year-end, with projected levels similar to current values. For a more detailed outlook on the Czech economy and its future prospects, download our full report now.