Czech Republic flag Czech Republic: Economic outline

Economic Outline

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 fundamentals of the Czech economy that had supported growth - domestic demand, tax, revenues and exports. A decline in all three meant that the Czech economy contracted by 5.8% in 2020. Nevertheless, the country’s economy rebounded in 2021, supported by robust domestic demand, and grew by an estimated 3.8% despite supply chain disruptions that weighed on production and exports (particularly in the automotive sector). Economic activity is forecast to accelerate in 2022, driven by both domestic and foreign demand, including public investment supported by the EU’s Recovery and Resilience Facility. Overall, the IMF forecasts a growth of 4.5% this year, followed by 4.1% in 2023.

The Czech economy had already shown signs of slowing before the outbreak of Covid-19 amid a lower growth in Germany and trade uncertainties caused by Brexit. In 2021, higher expenditure triggered by the extensive fiscal stimulus measures to contain the effects of the COVID-19 pandemic, a reduction in personal income taxes, and further increases in pensions and public wages prompted an increase in the general government budget deficit, which stood at 7.4% of GDP. As most measures phase out, the headline general budget deficit is expected to decrease to 5% in 2022 and 4.5% in the following year, but still staying well above its pre-pandemic levels. Although public debt is still low compared to other EU Member States, the debt-to-GDP ratio is expected to follow an upward trend over the forecast horizon, increasing from a ratio of 45% in 2021 to 50.3% in 2023 (was 30% before the pandemic - IMF), driven by a negative headline balance only partly offset by nominal GDP growth. Rising production input prices and increased consumer demand prompted a rise in inflation, which stood at 2.7% in 2021 (still within the Czech Central Bank's tolerance band of 1-3%). It is expected to gradually decrease this year (2.3%) and the next (2%).

Czechia has a tight labour market and a low share of temporary contracts, with one of the lowest ratios of unemployment in Europe: at 3.4% in 2021, it is still above the levels recorded before the start of the pandemic. The accelerating economic growth should improve labour market conditions over the forecast period, with the unemployment rate decreasing to 3.2% in 2022 and 3% in 2023. However, labour shortages put constraints on future growth whereas the country's population is ageing and declining. Nonetheless, the share of high-skilled workers in the labour force has continued to rise in recent years. The IMF estimates the country’s GDP per capita (PPP) at USD 42,956 in 2021, slightly below the EU average.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 252.50e245.35e276.91302.06324.56
GDP (Constant Prices, Annual % Change) 3.0e-5.8e3.84.54.1
GDP per Capita (USD) 23,709e22,943e25,80628,07730,114
General Government Balance (in % of GDP) -0.8-5.4e-7.4-5.0-4.5
General Government Gross Debt (in % of GDP) 30.037.8e45.047.950.3
Inflation Rate (%) 2.83.2e2.72.32.0
Unemployment Rate (% of the Labour Force) 2.02.5e3.43.23.0
Current Account (billions USD) 0.848.77e4.342.482.72
Current Account (in % of GDP) 0.33.6e1.60.80.8

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Czech Crown (CZK) - Average Annual Exchange Rate For 1 GBP 33.0030.0928.9928.6329.76

Source: World Bank, 2015

 

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: June 2022

Return to top