A strong start to 2025 in terms of GDP. Will it last?
The CNB comments on the GDP figures for 2025 Q1
The performance of the Czech economy at the start of the year was better than expected. GDP rose by 2.2% year on year and even a strong 0.8% quarter on quarter. However, this result was achieved before the blanket US tariffs were announced. It is therefore uncertain whether the Czech economy will be able to maintain this trend.
The favourable result was aided by a recovery in fixed investment, which continued to decline year on year (-0.6%) but increased by a solid 1.1% quarter on quarter. This was due mainly to investment in dwellings as well as industrial and infrastructure construction. However, investment in machinery and equipment also returned to growth. Czech export performance is also proving surprisingly resilient. It is being driven increasingly by demand in non-EU countries. For both investment and exports, however, the question is how much the positive developments were due to one-off stockpiling by firms ahead of an expected rise in trade barriers.
Trade wars and related uncertainty could disrupt the ongoing recovery. Investment and exports would be the first to be hit. By contrast, household consumption should remain strong, aided by rising wages and low and stable inflation. Overall, the CNB thus expects economic growth to be close to 2% this year, with fixed investment stagnating and net exports continuing to make a modest negative contribution.
Jakub Matějů, Acting Executive Director of the Monetary Department
2025 Q1
year-on-year in %
actual figure
MPR Spring 2025
Gross domestic product
2.2
2.1
Household consumption
2.5
3.3
General government consumption
1.9
3.9
Gross fixed capital formation
-0.6
-1.3
Change in inventories (in p. p.)
1.2
1.1
Exports of goods and services
3.6
1.6
Imports of goods and services
4.6
3.2
Net exports (in p. p.)
-0.4
-0.9
prices of 2020 (chain-linked), seasonally adjusted
A strong start to 2025 in terms of GDP. Will it last?
The CNB comments on the GDP figures for 2025 Q1
The performance of the Czech economy at the start of the year was better than expected. GDP rose by 2.2% year on year and even a strong 0.8% quarter on quarter. However, this result was achieved before the blanket US tariffs were announced. It is therefore uncertain whether the Czech economy will be able to maintain this trend.
The favourable result was aided by a recovery in fixed investment, which continued to decline year on year (-0.6%) but increased by a solid 1.1% quarter on quarter. This was due mainly to investment in dwellings as well as industrial and infrastructure construction. However, investment in machinery and equipment also returned to growth. Czech export performance is also proving surprisingly resilient. It is being driven increasingly by demand in non-EU countries. For both investment and exports, however, the question is how much the positive developments were due to one-off stockpiling by firms ahead of an expected rise in trade barriers.
Trade wars and related uncertainty could disrupt the ongoing recovery. Investment and exports would be the first to be hit. By contrast, household consumption should remain strong, aided by rising wages and low and stable inflation. Overall, the CNB thus expects economic growth to be close to 2% this year, with fixed investment stagnating and net exports continuing to make a modest negative contribution.
Jakub Matějů, Acting Executive Director of the Monetary Department
prices of 2020 (chain-linked), seasonally adjusted