Following a temporary slowdown, we expect the economy to pick up again next year In 2H25, we forecast a significant deterioration in Czech economic performance, as the impact of US tariffs shifts from positive to negative. However, we expect economic growth in 2026 will be supported by a strong fiscal stimulus from the likely new government. We forecast GDP growth of 2.1% this year, driven by what was a very solid 1H25, before slowing to 1.6% in 2026.

Inflation to fall below 2% in 2026 before rising above the CNB’s target again We expect lower energy and fuel prices, including the effect of the planned transfer of payments for renewable energy sources from households to the state, to push inflation below the central bank’s 2% target next year. However, subsequent price developments are likely to be affected by a recovery in domestic demand driven by expansionary fiscal policy. We estimate inflation of 2.4% in 2025 and 1.5% in 2026.